Saturday, 28 March 2015

The Problem Isn't Just Clarkson, It's The BBC Too


The BBC has an extraordinarily high number of good looking female presenters. It is evident that when it comes to the job of a TV presenter, ugly males are discriminated against at a ridiculous level. Only joking.

Behind the joke, though, there is an element of truth - television companies appoint presenters based on what they think the viewers want. If they favour good looking women then ugly men are being discriminated against. If they favour intelligence then unintelligent people are being discriminated against. But in protesting about this what we're actually doing is protesting about viewers' tastes, because it is viewers' tastes that contribute most to television programmes.

Viewers prefer an intelligent person hosting Newsnight; but they don't mind unintelligent people in the Big Brother household. Naturally, Newsnight and Big Brother have largely different audiences - but that is precisely why viewers' tastes work differently for each show.

I hadn't planned on blogging anything to do with the recent Jeremy Clarkson affair, but it can't be left unsaid that even if his straight-talking, non-pc libertarian politics was anathema to the BBC, his sacking was actually down to his repeated bad behaviour for which most other people would have also been sacked.

But while we've seen the emergence of a heated debate between Clarkson's supporters (who wish he hadn’t been sacked) and the many opponents (who are glad he has been), the big issue that underpins it is the very existence of a state-funded BBC imposed on everyone in the UK through a compulsory licence fee. State-funded television is a guaranteed way to ensure that the corporation will not primarily be driven by providing the best TV for its viewers.

Suppose Café Nero suddenly came under state ownership, where the need to provide desirable products and a good service was alleviated by the guaranteed flow of taxpayers' money. Do you think Café Nero would then be better or worse? It would obviously be worse, because all the market pressures to consistently perform well and give people what they want (or lose out to competition) would diminish.

Similarly, being guaranteed by state-funding, the BBC is less alert to the market pressures that other companies have to consistently provide popular TV. The current director of BBC television Danny Cohen (pictured next to Clarkson above) has done something akin to a Café Nero executive who decides to remove one of the top selling coffees from the menu - a move that would guarantee to upset and elicit action in the Café Nero shareholders.

It's not first time Danny Cohen has done this. He's the chap who demanded that all-male BBC panel shows must be discontinued. He's also the chap who insisted that the BBC's comedy was too middle class. He's also the chap who publicly asserted that the BBC needed much more diversity in its programmes.

Being state-funded, the little notion of letting the viewers decide what and who they want to watch is pretty alien to the BBC. To see why, imagine a time when television watching is even more sophisticated than it is now. In the future all viewers' experience involves paying only for the packages or channels or individual programmes they want to watch. In other words, what you watch and what you pay for would be entirely dictated by your personal preferences. Instead of some priggish left wing bien pensant director asserting how many males are on a panel, how middle class the comedies are, how many black or white people there are in each drama, and which presenters should be sacked, the public would vote with their most powerful tool - by staying tuned, by changing channels, or by switching off.

Given that I'm a mandatory license fee payer, I don't actually have any issue with Clarkson's sacking in this particular case. After punching someone, the BBC felt they had to act tough on Clarkson and make an ethical decision, even if it means losing a popular presenter and a popular TV show to another channel (probably SKY TV). But I hold that view largely because I don't really like Top Gear or have much interest in Clarkson. If the BBC sacked someone you or I really loved watching, and denied us the opportunity to vote with our remote control, I think we'd feel the dissonance a bit more.

In all likelihood, most people who support Clarkson's sacking are probably people who aren't that bothered about watching him and Top Gear, whereas most people who wish he hadn't been sacked are probably people that do like watching him and Top Gear. And that little fact alone gives perfect exhibition to the extent to which the BBC is in need of market forces.

Thursday, 26 March 2015

Voting Qutopianism (Warning: High Wonk Content Contained Within)


People who favour democracy should wish for votes to translate into MPs, but alas, as things stand the constituency boundaries currently favour Labour and disadvantage the Conservatives, because they are not of equal size, and because Tory votes are often heavily concentrated in safe seat areas.

The proposal to reform the boundaries was blocked by the Lib-Dems in coalition a couple of years ago - a reform that would have seen the number of MPs reduced to 600, and the constituency boundaries being of roughly equal size, making the political outcome much more representative as the Conservatives would have gained between 20 and 25 extra MPs. Until those boundary changes occur, the people of Great Britain will not be democratically represented in a way that reflects their votes.

Not only does percentage of votes not translate consistently into number of seats - number of seats doesn't translate into voting power either. At the low end there is no direct link between a party's influence and its number of votes.

Imagine a reduced parliament in which there are only 120 MPs.  The Conservatives have 50, Labour has 40, The Lib Dems have 20 and UKIP has 10. Despite Labour having twice the number of MPs as The Lib Dems, a coalition between The Conservatives and The Lib Dems would give them a majority, and give Labour less power than a party that obtained half their MPs. There are a vast number of inter-party permutations for coalitions, meaning that a party with relatively few votes can be nearly as powerful as a major party in a coalition, or equally pretty much powerless, depending on how the land of the coalitions lies.

While we're in the mood for oddities - some of you may have heard of Kenneth Arrow's 'impossibility theorem', which proves that an aggregation of society's individual preferences doesn't translate into a comprehensive aggregate societal preference. Let me try and break it down this way. Imagine the three big leaders are running for a national popularity contest, and observe the strange goings on that occur here. Let us say that a third of the electorate prefers Ed Miliband( M ) to Nick CKlegg ( K ) to David Cameron ( C ), another third of the electorate prefers K to C to M; and the remaining third prefers C to M to K. There is nothing particularly strange about this until we consider what happens in two person contests given the above preferences.. M can boast that two-thirds of the electorate prefers him to K. C responds that two-thirds of the electorate prefer him to M. Finally, K counters by noting that two-thirds of the electorate prefers him to C.

In mathematics, a binary relation over a set is transitive if whenever an element a is related to an element b, and b is in turn related to an element c, then a is also related to c. If the societal preferences in what I’ve just said are determined by majority vote, we have an irrational ordering of preferences; that is, ‘society’ prefers M over K, K over C, and C over M. Thus even if the preferences of all the individual voters are transitive (by that I mean that transitivity holds if, wherever a voter prefers Cameron to Miliband and Miliband to Clegg, he or she prefers Cameron to Clegg), the societal preferences determined by the majority vote are not necessarily transitive and thus not necessarily rational either.

Kenneth Arrow's theorem demonstrates that given the foregoing all reasonable voting systems (or equivalently, economic market systems) are subject to such irrationalities.

Let me try to posit some further clarity with a different illustration. Think of our three leaders M, K, and C as cars rather than people, and then think of a woman deciding which of the three cars to buy. Let’s give her three criteria (interchangeable and commensurate with one another) for making this decision; looks, affordability and performance. Car M looked better than car K, which looked better than car C. On the other hand, car K was more affordable than car C, which in turn was more affordable than car G. Finally, car C performed better than car M, which performed better than car K.

Since the woman placed equal and commensurate measure on each of these criteria, she would be in a bit of quandary here. She clearly preferred car G to car K (M outscored K on two criteria). She also preferred car K to car C (for the same reason) - yet she preferred car C to car M. And if you are following here you will see that the same problem of non-transitivity holds for individuals, and that when broadened out to an election it leaves a bit of a detritus. In the case above one only need induce the woman to declare one of the criteria more important than the others. This is easier than convincing one third of the electorate to change its mind.

Given the foregoing; there are four conditions under which consistency will show that we cannot derive societal preferences from individual preferences…

1) The societal preferences must be transitive (if society prefers x to y and y to z then it must prefer x to z)

2) The societal preferences must satisfy the principle - if alternative x is preferred to alternative y by a majority in the society, then society must prefer x to y.

3) The societal preferences must satisfy the independence of irrelevant alternatives (the societal preference depends only on the orderings of the individuals with respect to alternatives in that environment).

4) The societal preferences must not be susceptible to autocracy - there is no individual whose preferences automatically determine all of society’s preferences.

As for the realities of the electoral situation, of course we know that the political portrait of lucidity has been gravely disfigured from the bottom up as much as the top down, so the absolute best that one can hope for is that through the media-manipulating smokescreen the impressionability and cognitive indigence does not wholly impair the view of those gazing in, and that in the absence of a good rationale people’s gut instincts amount to enough in seeing who is very evidently the least bad party for the job - at least in the next few years.

 
* Photo courtesy of the BBC

Tuesday, 24 March 2015

Climate Change Debate Part IV: The Final Cost-Benefit Analysis


Here we are with the final part in the Climate Change Debate series. We've seen in parts one and two how our foresights into the future are mostly beset by uncertainty, and how the present (not the future) should be the primary consideration for the debate. We saw in part three how the science is right about many of its claims, but that caution is of paramount importance. Now to conclude we'll undertake a cost benefit analysis about whether green policies in the here and now are good or bad in net terms. I will look to show, in the arms race between green polices and scientific augmentation, that science is a heavy odds-on favourite when playing the long game.

When debating climate change a lot of people just don't get this one key point they really need to get - that it's all about the net result, not just whether we are causing harm.

This Greenpeace page is a typical example of an article that conveys the basics of the dangers of climate change. Here's the main crux of what we are told:

"Climate change is caused by the build up of greenhouse gases - from burning fossil fuels and the destruction of areas that store massive amounts of carbon like the world's rainforests. No one knows how much warming is “safe” but we know that climate change is already harming people and ecosystems around the globe".

Do we know this in 'net' terms though? We know that climate change is occurring; we also know, or are willing to consider, that humans are contributing to a vast proportion of it. But as far as I know we don't know what proportion of climate change is down to humans - and if we don't know that, we certainly do not have any justifiable substantiation that our contributions are harming the planet in terms of net harm. I've no doubt many people could send links to papers in which people have alluded to plenty of correlations - but I'll wager that those papers do not contain any evidence for causal links that demonstrate beyond reasonable doubt that the human contribution is the thing that's causing harm. Remember that key difference: there's a difference between causing climate change (which all of us should be ready to accept) and causing aggregate harm (which all of us should not be ready to accept). If our activities are not causing net harm, then many if not all the current environmental policies enforced on us may be misjudged.

The green position seems to be: assume we have justifiable substantiation that our contributions are harming people, and in response take mitigating action. This is not a very sensible thing to do. The method should be, first obtain confirmed evidence (remember, evidence of net harm, not evidence of humans causing climate change), and then act on it.

A friend of mine once objected to this as he used the following analogy to try to justify the notion that preventative action is a way of minimising the harm: "You don't wait for a probable whooping cough outbreak before vaccinating children against it”. In some cases preventive action is good. But his is a bad choice of analogy - it is easy to assess the net harm that whooping cough does to people's health, and there are very few offsetting benefits to whooping cough either. Neither can be said of green measures. Plus vaccination against whooping cough has few detrimental effects on the economy and on our liberties and freedom - whereas green measures have plenty.

What greens have to demonstrate is evidence that the human effect brings about net costs, and that green acts of mitigation bring about a net gain. I have seen evidence for neither. To put it another way, even by asking whether there is justifiable substantiation that our contributions are harming people, they are asking the wrong question. There's no doubt our activities cause some harm (even taking a flight to Canada or a taxi to the train station causes some harm) - the vital question is, does the net harm outweigh the net benefits, and do the mitigating activities confer more benefits than costs? If the answer to both is no - and I'm pretty certain it is - then mitigating action should be diminished - not wholly discontinued, perhaps, but diminished.

The greens tell us that 'catastrophic changes' are occurring, and that we are precariously getting swept up in a vortex of climate change. My main reason for being at odds with green-centred politics is that the fundamentals behind their ethos - "The climate is being negatively affected; humans are negatively affecting it, therefore the continuing trend is bad and needs drastically addressing", is in my view the ethos that’s presumptuous, unsubstantiated and spurious.

The problem with the above claim is that it is an assumption made without qualification. Whenever you have a situation in which X is happening (where X is negative), and Y is causing X, one can't just proclaim that the continuing trend is bad and needs drastically addressing, because there may well be other ways in which X's negativity is being offset by other factors not in the equation. 

I have only ever seen greens talk about the harms caused, they have never once compared those harms to the benefits and shown a net cost, which means they still have all their work ahead of them. Their fault is on focusing on a few global bullet points (sea levels rising, overall temperature increase, deforestation) and treating them only as bad, or as bad but understating the good outcomes. Yes, overall temperature increase contains bad effects (although one can't be certain that temperature increases are going to continue on this trend), but it also contains good effects too, as I'm sure the people of Greenland, Siberia or Alaska would testify.

As is usually the case, an economic way of thinking would guard against falling for the kind of errors the green-keens are making - because economic thinking wouldn't just involve asking whether there are good and bad effects - it entails wanting to know if there are net costs sufficient that the bad effects outweigh the good effects. How are we to tell, say, if rising sea levels in the Indian Ocean balances out with the emergence of more habitable areas of Siberia or Alaska? Don't forget this won't happen overnight - it happens over decades and centuries, so any considerations that factor in sudden and unexpected inconveniences are a solecism against good enquiry.

Don't forget also that if you asked a man in 1913 about how the world would look on a global level in 2013, he'd have no way of foreseeing it in its current set-up. If environmental changes occur over such slow passages of time, then in a few decades countries surrounding the Indian Ocean may well be well prepared for rising sea level, and Siberia or Alaska probably will hugely benefit from increased global temperature. From what I can see from looking at their literature, the greens haven't offered any proper cost benefit analysis on the dynamical change of global states - they've merely prodigiously estimated the costs and exiguously estimated the benefits. Of course, that doesn't mean the greens are wrong - it only means the methods by which they think they are right are faulty.

In offering an economic view of the situation - one that has no ideological biases - I'll tell you how I think it really is. Climate change is presumptively unwelcome, whether it is hotter or cooler, because present human endeavours are optimised specifically for present day conditions. Whether you're farming, building factories or houses, or designing railways or cars, you are optimising the production for modern day use consistent with modern day conditions. But environmental changes are gentle century-long slopes not steep month-long drops - so once you consider the extent to which activities associated with farming, factories, house, railways and cars will have changed in a century to be coterminous with the gradual changes in the environment, you see there are probably no crises at all. Given that the earth's climate and environment has been changing for millions of years, it is obvious that no climate of any time is the optimal one in absolute terms.  If there is no reason to believe that the present climate is the optimal one, then assertions that we need to be preoccupied with green issues are hard to justify, as adapting to the gentle century-long slopes of change is not only something we have to do, it's something we've been doing since mankind began.  Economic thinking enables us to not fall for these extreme knee-jerk reactions - as the climate throughout our human evolution has varied by considerably more than the comparably meagre changes being predicted for global warming in the next few hundred years.

It's because humans have lived, survived, increased in numbers and prospered over a range of climates much greater than the predicted range by climate-obsessors that economist-type thinking must, for me, involve some raised eyebrows.  It's fairly obvious that if there's no reason to believe humans will be negatively impacted by future climate change, with every evidence that our present and future innovations will more than offset any environmental shifts, it's equally absurd to bear sizeable resources (time, energy and money) trying to prevent this change. I'm not saying we shouldn't be mindful of being more environmentally and ecologically prudent, nor that we should avoid doing what we can to diminish the extent to which environmental change occurs with rapidity, but that's a far cry from addressing the issue as being an urgent, costly and radical necessity.

You are quite welcome to hold the view that there are more negative effects to global warming than positive effects, but to make it fly you must provide reasons to justify it - you can't just exaggerate the negatives and understate the positives, and decree yourself to have taken the right stance on this. I'm interested in compelling arguments, and evidence-based conclusions - but I haven't heard any yet, so for now I remain sceptical, particularly as being green-focused seems to aid popularity amongst the electorate, which does, of course, provide political parties with the motive for propagating unbalanced green-keenness.

If you instantly transported the UK 1950s population into the present day they would be quite flustered by all the changes: not only would they find technology, protocols, laws, customs and practices that baffled them - they'd find numerous changes for which they weren't prepared. What they thought was an allotment is now a shopping mall; the old tea room is now a McDonald's; and bugger me, the farm down the road is now a motorway. Radical changes to normalcy do cause lots of problems. But we are not talking about any such thing. Just as the 1950s gradually changed into the present day by passing through the 60s, 70s, 80's, 90's and noughties, so too will changes in the climate occur alongside our ability to adapt to the changing social backdrop.

A proper cost-benefit analysis
It's all very well saying 'cut down energy use' - but first we have to determine whether that energy use is worth cutting down, or whether we will develop the augmented science to adapt. In the ways that we can reduce our energy without huge costs (perhaps even net costs) fine - but if we just go all out for reduction reduction reduction (as the greens want us to) we fail to locate the point at which too much reduction is occurring.

The situation is roughly like this. If I want to build 25 houses in a green park area, the state of affairs from both sides has to be weighed up. There are clear benefits (more people having somewhere to live) and clear costs (fewer people having somewhere to play or have picnics). Does the benefit of 25 families having a place to live outweigh the costs? That depends on who you are, and your perspective - but whichever way we cut the cloth, a cost-benefit analysis would be necessary.

Green taxes are basically equivalent to those on the economic left trying to buy a world with fewer emissions, which means a reduction in greenhouse gases and a cooler planet. Just like the park situation, a cost-benefit analysis is necessary - one which no one I know seems to offer us. To automatically assume that the price we pay for a cooler, greener planet with fewer emissions and a reduction in greenhouse gases is a price worth paying is ludicrously presumptuous.

Why carbon taxes are flawed
The problem with carbon taxes in the present day is twofold: 1) It is likely to be the case that a partial effort will not have the desired effects, and 2) An all out collective effort will probably end up being a bigger cost regarding time and money than the alternative option of more heavily investing in infrastructure to pre-empt future problems.

Number 2 is fairly obvious, as I’ve alluded to earlier - it is fairly pointless throwing billions of pounds at green policies when we can instead help the neediest people more directly with investment and aid, as well as eliminating the barriers that stop them trading. Number 1 might be less obvious at first, but it should soon be fairly obvious when elucidated. In life, partial efforts are often good, particularly if the results are not impeded by others' non-involvement. Giving to charity is a case in point - if 30% of UK folk donate to Save The Children then poor children still benefit because despite 70% not giving to that charity (some may be giving elsewhere) what they do collect still helps. Similarly if 90% of the country picks up litter then their efforts are not wasted because the other 10% did not. In the cases of charitable donations and litter picking, every little bit helps - and despite being simple on the surface, this is measured with rigorous economics (basically, if the Pareto efficiency or Kaldor-Hicks efficiencies are such that negative externalities are immeasurable or inconsequential to the positives then every little really does help).

But when it comes to reducing your own carbon footprint, things are different - because every little bit does not necessarily help - not in net terms. There are two reasons why this is the case: Firstly, reducing your own emissions is a solitary effort that will have no real impact at the global level. Even if 50% of the UK's citizens made a concerted effort to reduce their carbon footprint it would still be a drop in the ocean compared with the triune considerations of a) overall global consumption, b) the extent to which climates change outside of human involvement, and c) the comparative advancements of future generations.

And secondly, your reduced consumption will be offset by increased consumption elsewhere. As a hypothetical social experiment, suppose half the UK population were randomly drawn in a lottery and made to reduce their carbon footprint by 20%, with the other half free to carry on as normal. Here's what would happen. The reduction in consumption by half the people would reduce aggregate demand for ecologically unfriendly goods, which would see a drop in their price, which is going to increase consumption for others. What the 50% will actually be doing is helping out the other 50% in buying cheaper fossil fuels. Obviously that's too simplistic because there are global factors to consider, but they do not affect the truth of the statement that reduced consumption for some will mean increased consumption for others. 

If you can't get your head around it, imagine what would happen to the price of high heeled shoes if half the high-heeled shoe wearing women in the country stopped wearing them and reverted to flat shoes instead - the other half of the demographic would buy more pairs because they'd be getting them a lot cheaper. Moreover, because politicians can only bring about the imposition of green taxes on their own citizens, not those of other countries, the same problem will apply at a global level - reduced consumption for some countries will mean increased consumption for those other counties that will be beneficiaries of cheaper fossil fuels. The cost incurred by those carbon-reducing countries will thus have a limited payoff in terms of overall global reduction, so one can argue that they are being hit unfairly.

So it is literally the case that unless the vast majority of the world’s population are singing from the same ecological hymn sheet, environmental progress in some areas will be cancelled out by environmental regress in other areas. Given this realisation, it is even harder to justify green climate policies like carbon taxes. Politicians around the world, though, don't see things that way because they can simply impose Pigouvian taxes on the whole country, penalising everyone for consumption, emissions and pollution, in full knowledge that most of the country is either too apathetic or too daft to challenge it.

When governments can't solve a problem, you can be pretty sure that quite often the market can. The Mises Institute gives a summary here of how the market can introduce accountability to take the place of carbon taxes. But despite being a libertarian, I'm going to suggest that I don't think market forces will come in and transform this in quite the way the Mises Institute hopes; the time, money and energy expended in getting all these market forces up and running may well cost more than the benefits they engender, for reasons that will be clear shortly.

Carbon taxes: flawed but worth supporting?
Consequently, then, despite the many flaws in carbon taxes, because of the discontinuity between the status quo and the full market solutions, I'm going to tentatively argue that carbon taxes are perhaps the best option as a short term solution. I'll break this defense down into 6 key points.

1) The main defining problem of climate change is that we are all part of the problem as well as part of the solution. We all rely on vehicles that clog up the road for others, pollute the air, and put the price of fuel up. We also use our central heating, wash our clothes and buy things that came from widespread transportation. Many of us even use aircraft to fly abroad, and run businesses that emit lots of carbon. The upshot is, we all contribute to greenhouse gas emissions, so what's needed is a collective effort to change things.

2) This kind of activity has indirect consequences for people who live near rainforests, people in hot countries, and it may well even have consequences for people who haven't been born yet. Even though both the problem and the solution is a shared one, it is difficult to get everyone to co-operate in shared solutions, which is where the State comes in.

3) The State imposes price increases on our transactions in the shape of carbon/pollution taxes, which incentivises us to be self-interested in being more responsible with our environmental activities. One problem I have with carbon tax is that due to lots of asymmetry of information the setting of a carbon tax rate is almost entirely arbitrary. Still, despite this, carbon tax does some good for the following reason. People change their bad consumption behaviour to accord with differing incentives like price changes. So for example, a tax on carbon dioxide emissions of £50 or £60 a tonne would affect our consumption habits in relation to products and services associated with carbon dioxide emissions, whether it be driving, flying or whatever.

4) If this tax enabled the government to reduce taxes in other areas, then the carbon tax would help us change our habits and at the same time bring about selection pressure in the market for us to be more mindful of the environment. This is part of a general law of economics – when prices go up or down, people change their buying habits. If the price of red grapes goes up by 40% and green grapes stay the same, people will buy more green grapes and fewer red grapes. If the price of emitting carbon goes up, people will lower their CO2 emissions, which will place selection pressure on consumers and on eco-unfriendly businesses. This means that as carbon/pollution taxes endure, people will look for more ways to be greener, making us as humans more mindful of our environment.

5) Given the foregoing, it would seem to me that we appear to be doing about as much as we can to tackle climate change. That is to say, we keep hearing about how we need to act urgently to save the planet from destruction (whatever that means), but we seem to be already doing all we can to raise awareness and change people's behaviour. Ok, so perhaps we aren't doing everything we can - there is always more that we can do, but what? We are already penalised for our emissions, and we already pay higher prices for our carbon effects, and these things give us the incentive to be greener.

6) The green taxes will almost certainly bring about a phasing out of environmentally unfriendly activities. The scientific and technological capabilities we acquired in the past few hundred years is what confirms to me that we are doing as much as we should be doing, and that on top of carbon taxes, our science, technology and market activity should do the rest.

It is this last point that makes all the difference in being able to defend the short-term solution of carbon taxes, because our science, technology and market activity is what will ultimately bring about the changes needed.

The future science saving the day
So the proper cost-benefit analysis has been this: what are the costs and benefits of intervening in global warming, and what are the costs and benefits of letting it continue and doing nothing costly to slow it down? That depends on another crucial question - will future science and technology enable us to make corrections for global warming and adapt to the changes that have been caused by the increased CO2 emissions in recent decades? If the answer is yes - and all the indicators point to it being yes, then these green-centred Pigouvian obsessions will have been merely a temporary nuisance that we lived through in the intervening years.

In other words, there is an arms race between science and green polices, which science looks sure to win. Looking at some of the breakthroughs in nanotechnology and shape-shifting, as well as virtual reality simulations, gives strong indication that science will win the arms race, which also gives strong indication that green policies are causing harm in the here and now and are not going to have any net aggregate positive effects on the well-being of future generations.

Even if future capabilities will be such that climate issues will more than likely be subjugated by newer technological advancements that wean us off natural resources and enable us to harness safer potentialities, the issue of what we should do in the here and now still looms large.

You may ask how we know we'll augment our technology, and why we can be so confident about it. The reason being, it's the same indicator that we've seen in every walk of industrial and technological life for the past two centuries. Human endeavour is about improvement, which is about innovation, problem-solving and adapting to change. Obviously there are ups and downs, but the general trend is progression. Let me give you an example of justified confidence by focusing on one thing - solar power (I've picked this because it's probably going to be the kind of energy that most transforms our scientific advancements). Using solar power technology we can convert the sun's light into energy. When I was a lad even solar powered calculators were an impressive novelty - plus we had a little knowledge of how in the 1950s scientists powered a weather space satellite using solar energy.

Nowadays, and even now still in its relative infancy, we see solar panels on many roofs reducing people's heating bills; we see solar powered electric vehicles with EV charging stations; we see super skin controlled by solar power; we see solar powered E-Reading; we see solar tracker solar panels; and solar powered computer keyboards, to name but a few. It won't be long before solar energy powers just about everything: planes, buses, spaceships, buildings - you name it. Multiply those solar examples by all the other individual and collective achievements (past and present) and you'll see there is reason to have confidence in our future advancements. For now, though, as these future innovations continue to gather momentum, and as we gradually wean ourselves off the dependency of fossil fuels, I'm willing to accept that, as the best of several imperfect alternatives, carbon taxes are perhaps the best way to see us through this. Remember too, that taxes acquired from carbon emissions are taxes that don't have to be acquired from other activities. It's a golden rule that if you tax something you get less of it - so taxes that reduce our pollution but at the same time reduce our tax paying in other areas seems like the best of a bunch of less than ideal solutions.

Hopefully after our analysis you have a clearer picture now of everything that is wrong with the climate change assessments, and how much more wisdom needs to be applied to the human reaction to climate change. The final summarising point I want to make is that in light of what we’ve concluded, a sensible policy on climate change is still needed – whether that policy is to do less, more, or something different. When the State intervenes to mitigate the extent to which humans harm the planet, they are trying to prevent future damage by minimising present benefits. If present benefits outweigh future costs we should carry on enjoying them, and taxes and regulations imposed upon them are more harmful than good. If future costs outweigh present benefits then taxes and regulations imposed upon them are more good than harmful. This is what is meant by maximising utility - net benefits outweigh net costs. Greens believe that things like carbon taxes maximise utility. Sceptics like myself believe that carbon taxes far from maximise utility (even though I support them as a least bad solution). The right amount of carbon tax is this and only this: it is a tax that imposes prohibitive costs on low-utility activities while still allowing for high-utility activities. The trouble is, due to the complexity and inability to see into the future with any degree of rigour, the level of utility is hard to distil, leaving us only with probability.

The probability estimate is roughly this; if activity A has significant emissions and few offsetting benefits to make it a low-utility activity then carbon taxes on it should be encouraged. If not, carbon taxes should be discouraged. If activity B has significant emission but enough offsetting benefits to make it a high-utility activity then carbon taxes on it should be discouraged. Where the future costs outweigh the present benefits we should make the activity price prohibitive. Where the present benefits outweigh future costs we should make the activity price conducive. If under a system of high or maximum utility we can't go on to produce an alternative to our carbon taxing system then we know we are doing the best and most practical things; if we can go on to produce a better, higher utility alternative, all the better.

Let me give you a simple illustration to show this: take cars. Either the future technology will or won't turn our car industry from a high emissions petrol/diesel generated industry to a low emissions electric/solar powered industry. All the evidence thus far suggests that it will (there are electric car prototypes in place, even as we speak). Give it a few decades and there'll probably be very few if any petrol or diesel driven cars. So, then, using our utility measurement above, the right kinds of car will be produced in the future if it's efficient to do so - and this will happen irrespective of whether the State influences the market or not. It's true that carbon taxes swing the incentive towards more environmentally friendly industries but that doesn't mean it's a good thing. Taxes on foreign charity may well swing more donations towards the British Heart Foundation, but that doesn't mean this swing is a good thing either.

Here's an example of how not to undertake this analysis. The Liberal Democrats, driven by Tim Farron, want to ban all of the standard petrol or diesel driven cars by 2040 and allow only vanishingly low emission vehicles on the roads (presumably they mean electric and solar). A simple understanding of the cost-benefit analysis above would show that such a ban is irresponsible and unnecessary. Here's why. If the present benefits of petrol or diesel driven cars outweigh future costs we should carry on supporting them, and taxes imposed upon them are more harmful than good. If on the other hand future costs of petrol or diesel driven cars outweigh present benefits then taxes imposed upon them are still more good than harmful. Translated in terms of what the future will hold, what we are saying is: if future technology brings about electric or solar vehicles with greater utility than petrol or diesel vehicles then we'll see a natural switch driven by voluntary market choices, rendering the Liberal Democrat ban entirely unnecessary. But equally, if future technology brings about electric or solar vehicles with less utility than petrol or diesel ones then we won't see a natural switch driven by voluntary market choices, which means that banning such vehicles (or even heavily taxing them) will make us all much worse off. Either way, a ban is a foolish thing to impose.

Final point
Finally, on the issue of the present vs. the future, consider this question: who would find it easier to adapt to climate change - a population living in 2014 or a population living 1814? Clearly the answer is 2014. Economic, scientific and industrial advancement make it easier to adapt to the climate. The logical corollary is that even if we admit that the human innovations of (in particular) the past two centuries have caused significant climate change, it is far more practical to facilitate the economic, scientific and industrial advancements to adapt to it than it is to discontinue it. With this truth acknowledged, coupled with the earlier analysis, it is quite obvious that future generations will adapt to climate change much more easily than we could. Moreover, whatever we conclude with regard to our responses to climate change, we will not make bad policies better. For example, even if from our analysis we had concluded that a big State-driven effort is needed to mitigate the problems of climate change, it won't alter one jot the fact that the plethora of anti-market policies will continue to make things worse not better. For example, even if we decide that plenty of action is required, that wouldn't suddenly make protectionism, government subsidies, bail outs and excessive regulation more attractive.

The other danger is that with excessive green influence in our politics, anything can too easily be ascribed to climate change. Whenever ice melts we are accused of burning too many fossil fuels; whenever there are hurricanes we are to blame for increasing ocean temperatures, whenever there is a flood, a drought, heat waves, a shift in the Gulf Stream, it's all to do with human impact. And when these things happen, the first reactionary response is to implore the government to do something about it. Do these reactionaries think that floods and hurricanes and glacier melting have only occurred since humans have been around? Surely not. Don't misunderstand, I'm all for sensible mitigating action where it can be shown to be sensible, but the danger of looking for government intervention every time a snowflake melts is something that is likely to lead us astray.

Here's another obvious cost (and danger), aside from the billions of pounds - green biases skew the market in favour of renewable resource industries. If the greens get their way, they will spend inordinate amounts of money impeding the industry of the developed world, which is going to have a hugely detrimental impact on the developing nations still trying to capitalise on the industrial market of prosperity. The predicted temperature change over the next century is going to be well within the ingenuity of modern day humans, even for countries like Ethiopia and Sudan who look most likely to suffer from increased temperatures.  Don't forget, while there are many countries that will be precariously worse off due to climate change, there are many others that will be better off.

Clearly no sane and moral human wants to argue that, for example, Siberia's gain is Kenya's loss, and that one set of benefits offsets another set of costs - but the motion clearly calls for some wisdom here. If you have a situation whereby some countries are going to be worse off due to temperature increases over the next few decades and some better off, it is both ridiculous and nonsensical (not to mention harmful) to generate huge costs on an entire market industry, instead of the much better alternative of ensuring that the success of advanced economies goes towards facilitating positive changes for the less advanced economies. It may even be the case (and sadly, seemingly is) that in some of the worst cases our potential for aid and investment through advanced economic mechanisms are disempowered by various impediments in those countries (civil conflict, social unrest, political instability) - and that is devastating, but it certainly is not a situation that can be made any better by green policies.
 
* Photo courtesy of CartoonRob

Friday, 20 March 2015

Tax Poetry

In response to the Budget, there was an interesting article from Philip Booth at City A.M on the fraught nature of inheritance tax. One paragraph though seems so obviously misjudged that I have to wonder if I'm misreading it, as Philip Booth is not someone who would normally do this. He says:

"Many countries that have retained an inheritance tax instead tax recipients on their lifetime gifts received rather than taxing people on their assets when they die. Indeed, it is more logical to tax the beneficiary of a gift rather than the donor."

Unless I'm not reading him aright here, this makes no sense to me. He says "It is more logical to tax the beneficiary of a gift rather than the donor", but in the case of inheritance tax it is the beneficiary who picks up the cost, as the donor has already died. So in both of the cases he mentioned, it is the beneficiary who is ultimately being taxed, either on his gift or on his inheritance - there is no distinction as Philip Booth claims.

Never mind, I just wrote my own version of the Tax The Land poem - a sort of remake for the modern age:

Tax his work, tax his pay
Tax him on his holiday.
Tax his shares, tax his stocks,
Tax his pants and tax his socks.
Tax his savings, tax his debt,
Tax him on every cigarette.
Tax his car, tax his home,
Tax his lawn and his garden gnome.
Tax his exercise, tax his rests,
Tax his pay rise and all he invests.
Tax his food, tax his drink,
Tax everything but the kitchen sink.
Tax his mother, tax his wife,
Tax him all throughout his life.
Tax him until he's ninety five,
Tax him until he's no longer alive.
Now he's buried, though, don't yet relax,
You can tax his kids through inheritance tax.

Teach it to your kids - they might be future libertarianism's best hope! :-)
One..two..three..four...



Wednesday, 18 March 2015

Climate Change Debate Part III: Looking At The Science of Climate Change

Next week, in the final part of the series, I will undertake a full a cost-benefit analysis, looking at whether our long term problems are serious or not, and whether as our increased scientific, market and technological innovations continue they will render this whole climate change business a mere temporary red herring.

But before I do this, it is worth asking whether the green's interpretation of climate change science suffers from biases or intellectual skews. The indicators are that it does, and even that there are some pretty squalid distortions taking place. Greenpeace tell us that:


"The impacts of climate change are already being felt. Average global temperatures have risen every decade since the 1970s, and the 10 warmest years on record have all occurred since 1997".

This is true, but not necessarily compelling. Temperatures come in ups and downs. Measuring a few years since the 1970s just won't do. Below is a much more comprehensive set of data - it's a graph that shows global temperatures over the past 250,000 years:
 
 
 
Below is another graph - and this one goes even further - it shows global temperatures over the past 500 million years:

 


 

If you look carefully at both graphs, you'll see something interesting - we may be in a warm period, and quite a long one at that, but we are not in unprecedented territory - the planet has had similar peaks in the past. As you can see from the first graph, even the current warm period began several thousand years before the Industrial Revolution (the prior cooling period was down to an ice age). Given the foregoing observations, it's going to take quite a bit more than simply stating "We are in a current warm period" to show that this warm period is uniquely different to the others to the extent that we are the primary causers of a global catastrophe that needs mitigating by the green's preventative actions. The graphs show us that future scientific predictions should be done with humility. But even if scientists can confidently make forecasts about future global temperatures (it is thought that in the next 100 years global temperatures should increase from somewhere between 2-5%), such forecasts should come with some caveats.

Some scientists argue that climate modelling should be trusted because it is specific and can point to physical laws that are currently observable and constant. Alas, this is only half-true - but even if it were wholly true, that still does not justify such confidence that the green policies are the right ones. Just because a model relies on physical laws doesn't mean it has far teaching predictability. The weather relies on physical laws, but it does not have far reaching predictability. The predictions are relatively short-term; and in issues surrounding the perturbations of the environment short-term predictions are not very reliable antecedents for long-term outcomes.

Every day up until now 25 year old Julie has had eyesight good enough that she does not need glasses. She may justifiably predict that she won't in all likelihood need glasses in the next few days, nor weeks, nor maybe even months. But if she used those extrapolations to predict that she won't need glasses by the time she is 70, we would say that her short-term indicators are bad indicators for the future 45 years henceforward. Short-term climate change science suffers from the same problem. Trying to rely on long term predictions by extrapolating current patterns would be a bit like a man from another planet visiting earth for the first time in January and measuring the temperature in Trafalgar Square every day from January 1st through to August the 1st (increasing over the months from freezing up to 28°), and hypothesising that by December the temperature in Trafalgar Square will be 40°. 

Furthermore, merely focusing on the physics is not helping the green’s cause. No one disputes that the underlying physics behind any putative climate changes gives us empirical objects of study - and few deny that changes will occur. But the issue has never been about that - it has always been about how humans will respond to those changes.

Greens seem to have this faux-idealism that when it comes to temperature the world has some kind of objective optimality. It does not - some places benefit from higher temperatures, some from lower - but more than that - temperatures change over the centuries, and humans adapt to them - there is no optimal design for us. If there is no optimal design then this green metric of idealism that they use as a stick with which to beat us is misjudged. We cannot be castigated for contributing to the wrong kinds of temperature if there is no right temperature.

Yes it may be true that climate change is in some parts anthropogenic, but most of what we’ve done industrially and technologically has been to the huge benefit of the human race, not least in the way in which the industrial revolution and consequent progression-explosion of the past 200 years has increased life expectancy, prosperity, well-being, knowledge, and the many other qualities that benefit the human race. Don’t forget that our global emissions in the past century have been part of the very same scientific and industrial advancements that have facilitated this human progression. To criticise our innovations as being environmentally detrimental is a bit like criticising a vegetable patch for ruining perfectly good soil, or criticising medicine for ruining perfectly good plants.
 
For part one of this series - Climate Change Debate Part I: Confusion Between Risk & Uncertainty click here -

For part two of this series - Climate Change Debate Part II: Why We Don't Owe Future Generations As Much As We Think click here.
 
 

 



Saturday, 14 March 2015

Tony Benn's Best Legacy


It's March 14th, which means it is one year to the day that Tony Benn died. Unfortunately, despite an abundance of honesty and integrity in Tony Benn, there are numerous silly quotes for which he has notoriety. Here's one of my favourites, and one of the most well known:

"Every time I see a homeless person living in a cardboard box in London, I see that person as a victim of market forces."

To see how foolish that statement is, consider an alternative statement I made up which makes the same kind of error:

"Every time I see a car accident, I see that person as a victim of good driving".

Sounds silly, right? It is, but it's no sillier than Tony Benn's comment. Car accidents usually occur when there is an absence of good driving in that particular situation, not because someone is a victim of good driving. You can only be a victim of bad driving not good driving. Driving is a good thing, with lots of benefits - it is when driving goes wrong that there are aberrations that are felt by those involved in accidents.

Similarly, market forces are an overall good thing because they create prices based on people's desire for goods and services. A homeless person has not been the victim of market forces - he or she has more likely been the victim of a lack of opportunity to play an active role in the free market.

But even that might not tell the full story. I've met lots of homeless people who clearly are where they are for all sorts of drastic reasons - nothing at all to do with the free market. Many are homeless because of bad decisions in their personal lives, or mental health issues, or adverse life situations - all sorts of reasons - some beyond their control, some not. It goes without saying that we should do all we can to help people who've fallen on hard times, and show them love and kindness too - but to ascribe homelessness to 'market forces' is to say something outrageously facile, which will ultimately help no one.

I disagreed with just about all of Tony Benn's politics, but he did leave us with at least one good legacy. One of the shrewd observations he made was in metaphorically dividing politicians into weathercocks and signposts.

Weathercocks will assess the political climate, gauge public opinion, dip their feet in the political waters and test the temperature before deciding which position to adopt. They are panderers - reflecting the weather rather than going for any metrological change.

Signposts on the other hand are people able to change the direction of politics - they point in the direction they think people should go and they stick more firmly to their principles. They are not always right - Tony Benn, for example, was pointing his in the wrong direction - but the metaphor is not about efficacy of policy, it is about personality, character and integrity, and Tony Benn had it in abundance even if his medicine was poison.

Sadly, most politicians are weathercocks - they are chameleon-like - fading into the colours of those whose vote they want to win and whose party to which they want to be wedded. You will see them crank up their weather-cockery even more so in the coming weeks leading up to the election.

 
* Photo courtesy of theplatform.org.uk

Monday, 9 March 2015

Climate Change Debate Part II: Why We Don't Owe Future Generations As Much As We Think


This is a series in which I explore a 'back of the envelope'-type cost-benefit analysis of the human causes of, and responses to, climate change. For simplicity, I've used the descriptive term 'greens' in the forthcoming series, not to refer specifically to any organisation or political party, but as a term denoting people who believe that human beings are facing a serious global disaster if urgent measures are not undertaken to address our impact on the climate.

As a preamble to this series, last time out I explained how when it comes to climate change we are talking about uncertainties where no one understands the probability far more than we are talking about risk. Now I want to look at how mindful we should be of future generations, and what we owe them.


The usual rhetoric from the greens, often summarised with the sentiments seen in the photo above, is that failure to acknowledge the science of climate change, and failure to take responsibility for the human impact on the planet, is to take a wholly irresponsible decision to not support their cause for the good of humanity. If they can impugn you on your inability to start off the debate as a responsible citizen then they allow themselves no credible reason to listen to you much further.

But that's not the case with me; I am actually willing to accept much of the validity of the science of climate change (although as you'll see later in the series, there are grounds to be cautious), and I am perfectly willing to agree that we should take responsibility for the human impact on the planet in the shape of carbon taxes and similar such measures. Yet in spite of this, I will still show what I think the greens have got wrong in all this.
 
Green issues really boil down to two big fundamental trade-offs:
 
1) A trade-off between the present life lived by a proportion of the world’s population today against the present life lived by another proportion of the world’s population today.
 
2) A trade-off between the present life lived by people of today against the future lives lived by people who are going to be our descendants.
 
Let us first focus on number 2 - the present effects this generation is having on future generations – and let us consider what kind of sacrifices we should make for the benefit of our unborn descendants.

The key question is one which, unfortunately, is never even asked by most greens let alone answered: how much should we be mindful of the unborn? Greens never ask this question because they automatically assume that we should spend a lot of time, energy and resources being mindful of our future generations. Of course, in making this presumption they often wouldn’t even use language like 'mindful', they take it further with talk of us owing future generations, by which they mean it is our moral duty to make sacrifices to leave the world a better place for them. I'll address both. If we can show that the considerations of future generations should be vanishingly small, then the whole cost-benefit analysis boils down to costs and benefits in the present and immediate future.

How mindful should we be of future generations?
On the issue of our being mindful of future generations - it is difficult for anyone to justify it when they are indicted by a fundamental inconsistency in the present. Consider that most Brits, including many greens, are less mindful of foreigners than they are Brits. They care more about British votes, so they care more about British people than the needs of people dying through lack of fresh drinking water (that's a separate blog in itself). If they find it expedient to be more mindful of people (potential voters) inside their geographical borders to people outside them, what's wrong with finding it expedient to be more mindful of people alive today than people not yet born? In other words, if they are allowed to discriminate against people who happen to be in the wrong geographical region, why aren't we allowed to discriminate against people who happen to be born in the wrong decade or century? Let's make a fair guess - they have no idea how to answer that question. For me, the answer to how mindful we should be of future generations depends largely on what duty we have towards them, and how much we owe them. To elucidate on this, let's now talk about the real fallacy - all this talk of owing future generations.

How much do we owe future generations?
When a family hires a rowing boat for a lake trip, one of the adults should get on first and help the children climb on, with the second adult boarding last. Climbing aboard ahead of your children is not an act of selfishness - it is a sensible action that guards against putting the young ones at risk by placing them on the boat unaccompanied. Parents that let their children on first because they thought it made them look noble would be confusing responsibility with exhibitionism. It's far nobler to get one of the adults on the boat first to ensure the children's safety.

While it is quite rare in parenting, this kind of mistake is quite common on the political left - particularly by the green lobbyists who tell us that it is our moral duty to be very green-conscious because we owe it to our grandchildren, their children, and so on. This would be all very well if being green-conscious came for free. But, alas, it doesn't - there are huge costs - and nothing with huge costs should be considered without a proper cost-benefit analysis. Just like a father securing a stable position on the boat to enable him to help his family board safely, we too must climb ahead of our descendents and secure a stable economic position for them in the present day by doing all we can to help the world's neediest become prosperous.

I find the argument that we are somehow indebted to our future generations quite absurd. Yes, of course we ought to be responsible citizens, and always be the least wasteful we can be, but the way greens talk about owing lots to future generations and that we have a moral duty to live as carefully as we can for their sake strikes me as a strange position to take.

Such a myopic way of seeing the situation is down to the greens obsessing about the bad legacies we may (stress may) pass on, and failing to consider the enormous riches that the unborn will inherit from us. Look at the blood, sweat, toil, imagination and innovation that came from our ancestors to give us the kind of life we have today. As we keep exponentiating our skills and our ingenuity we bestow ever-greater riches for future generations.

Suppose I have a baby girl in a year's time, and I still live in Norwich (a relatively small city compared to the world's metropolises). Think what that child will inherit on the day of her birth: she enters a world in which she already has rich pickings of food, drinking water, roads, planes, and the luxury of plenty of leisure time. She also has a stable government, property rights, career opportunities, hospitals, entertainment, and thanks to the Internet, she has access to just about every fact that human beings have ever discovered, and to a vast proportion of other minds who she would otherwise have little chance of meeting.

Most importantly, though, she enters a world in which she'll be wealthier than any generation that has ever lived, a world in which she has the lowest chance of being involved in war, and a world in which science and technology will give her potential qualities of life that would have been unimaginable 250, 100, or even 50 years ago. All this she has inherited from this current generation and everybody's contributions that preceded them. So before people lazily wed themselves to what seems to be the default green position that we are going to burden future generations with a partially ruined planet and legacies from our own unmindfulness, let's have a reality check and remember how the rich scientific and economic pageant of our past and present is a pageant from which future generations will benefit without having had to do any of the groundwork. When we express it in those terms, all this talk of our owing future generations is shown to be, at best, an exaggeration, and at worst, a laughable misjudgement. 

Notice this irony too. The greens are always going on about redistributing wealth from the rich to the poor when considering people who are alive. Why, then, do they adopt the opposite approach to the unborn – people who are going to be much richer than us? When it comes to wealth, prosperity and well-being, just as being born in 2014 is much more of a blessing than being born in 1914 - being born in 2064 or 2114 will (in all likelihood) be much more of a blessing than being born in 2014. Making sacrifices now for the unborn future generations is to transfer wealth from the presently alive poorer group to the unborn richer group - the very opposite of what the greens support when the groups in question are alive in the present day.

I talked about what a great life my new daughter would be born into if she lived in my home city. I'm aware, of course, that these luxuries are not enjoyed throughout many parts of the world. If she was born in Ethiopia or Somalia the same couldn’t be said of her blessings. But ironically, the answer to this issue is the answer that shows why our consideration of future generations should be discontinued in favour of people suffering in the here and now. If, as seems obvious, global warming is presently worse for people in Ethiopia or Somalia than in Britain and America, then many efforts and costs expended for future people not yet born are efforts and costs that are taken away from Ethiopians or Somalis now. Unless you think that Ethiopians and Somalis of a few decades time are going to be worse off then present day Ethiopians and Somalis (and if you do you're almost certainly wrong) then deferring future considerations in favour of present day crises is both the right and most logical thing to do.

Because future generations are going to be more prosperous than us, and because it is both unethical and unwise to prioritise unborn prosperous people over present day plighted people, the trade-off between focusing on the present life lived by people of today against the future lives lived by people who are going to be our descendents comes down heavily in favour of focusing on the present life lived by people of today.
After the first post in the series, explaining that our foresights into the future are mostly beset by uncertainty, and after this post which frames the present (not the future) as being the primary consideration for the debate, what we must do next is undertake a cost benefit analysis about whether green policies in the here and now are good or bad in net terms. And that is what we'll do next time.
 
* Photo courtesy of m.santablanta.com

 ** To read Part One click on the link - Climate Change Debate Part I: Confusion Between Risk & Uncertainty

 
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