Photos of Tollesbury and Morocco

On the way back from India we stopped in Tollesbury, England to see some friends. Then we went to Marrakesh, Morocco to see another friend. Then I came home.

Photos of India

The rest are here, here, here, and here. Enjoy!

How conservation happens

Through the right incentives, namely profit:

"The pressure is immense" to cut weight, said John Heimlich, chief economist for the Air Transport Association of America, an industry trade group. "Every penny more per gallon adds $195 million to the industry's expenses per year. You simply cannot make all of that up with fare increases."

"Reducing consumption is a certainty," Heimlich said. "You're always going to win by consuming less energy."

To that end, carriers have pulled out unused ovens, magazine racks and trash compactors during the past few years. Some removed paper manuals in the cockpit and installed electronic maintenance logbooks.

Fort Worth, Texas-based American Airlines created a Fuel Smart Team in 2005 as fuel prices started to go up. Tom Opderbeck, American's manager of strategic programs, said the team tried to cut weight in places that customers wouldn't notice. The team capped electrical outlets in the lavatories and cut the power converters from the wall. It took out phones in seat backs and removed the heavy telephone wiring that was folded inside. "I always think we've come to the end of the list, but we keep on finding new items" to remove, Opderbeck said.

Read the rest here. Do you think any government agency or non-profit would go to these lengths to conserve energy? I'm afraid dimming the lights for an hour won't cut it. But if you like that idea maybe we can agree on flipping the lights off completely on about 95% of government operations.

Addendum: While we're on the subject, it looks like biofuel subsidies are proving to be a monstrous reminder of the law of unintended consequences.

India's environmental disaster

While I still don't have pictures from my trip to India, I can't help spilling the beans on the most striking and surprising aspect, especially after reading Tyler Cowen's poignant dissection of Jeff Sach's book Common Wealth: Economics for a Crowded Planet. Per Tyler:

I am much more pessimistic, partly for reasons Sachs already outlines. I won't recapitulate all of my previous writings on the topic (follow the links here), so let me give a kind of "splat" response: Chinese CO2 emissions are much worse than we had thought, China resists outside pressure, Chinese governance is often of very poor quality, China is currently subsidizing energy consumption, China thinks it is our problem to solve, China won't automatically keep on becoming prosperous, the super eco-conscious Europeans in fact haven't made much of a dent in the problem in terms of percentage change, the U.S. has done better on carbon emissions than most of the Kyoto signatories, the price of oil rose fivefold in a relatively short period of time without much helping, a gradual increase in carbon taxes (in a Hotelling model) can lead to more extraction today thus worsening the problem, and if the rich countries massively cut their carbon consumption the prices of coal and oil would plummet and the incentive for someone to buy and smoke the stuff will be all that much stronger.

Much of this resonates with my experience in India. It was not a romantic vacation, it probably took years off my life. The air quality was so bad that in three weeks of travelling I never once observed anything like a crystal blue sky, really it looked more like a nuclear winter (believe me, pictures will confirm this). There was a severe drought pushing its way eastward from the Thar desert, effecting the entire northeast region in which I travelled, Mumbai, Delhi, and Rajasthan primarily. For instance, the Bharatpur wetlands bird sanctuary, a World Heritage site, done dried up. Read some of these ridiculous Rajasthan tourism sites for Ranakpur and Udaipur, the "romantic city of lakes" and "Venice of the East," etc. More like a dust bowl.

North of Mumbai, in the state of Maharashtra, we observed streets lined with trees, their trunks painted red and white to indicate government protection. The rest of the countryside was barren. In Mumbai and Delhi the problem was more due to streets jammed with all manner of transport and refuse, ox drawn carts, cows, auto-rickshaws, and dump-trucks serving the booming economy. Eventually, I developed terrible asthma and a hacking cough which only subsided once I reentered the 1st world.

One optimistic view, propounded by the likes of Jeff Sachs, is that India's environmental problems can be corrected through some combination of regulation, carbon taxes, and subsidies for alternative energy technologies. Another optimistic view is that this is but a temporary phase that all industrializing economies go through. Compare London in the 1950s to today. That is, eventually India will get rich and then enjoy the luxury of harping about the environment.

Like Tyler, I now have a more pessimistic view. Jeff Sachs places too much faith in government, especially 3rd world governments. I spent a few days with Vivek Pandit, a politician of sorts, who has spent 20 years battling slavery in India. He lives like the Godfather on a compound outside of Mumbai, surrounded by body guards and adoring tribals and Dalits who he's helped free. The love they have for him is undeniable. And he has succeeded in many ways, particularly by holding politicians feet to the fire and making them accountable to the law. While I was there he took a group of tribals to the unemployment office to get their promised benefits. After waiting in line all day, in the end most were denied because they couldn't read the application.

The point is that government, especially in a place like India, serves those who can take advantage of it. As such, it becomes a tool for special interests, perpetuated my the misplaced hopes of the disadvantaged. I simply don't trust the Indian government to produce effective environmental policy.

Jeff Sachs is right about one thing, that the solution will likely come in the form of new technology from European countries, the U.S., and Japan. But how many years will this take? And as the situation worsens, how many years will it take the largely illiterate and disadvantaged lower castes of India to figure out a) what's causing pollution, b) what are the long term effects, and c) how to avoid it? I'm with Jared Diamond on this: environmental collapse is a distinct possibility.

David Mamet on the tragic view

Is the military always right? No. Neither is government, nor are the corporations—they are just different signposts for the particular amalgamation of our country into separate working groups, if you will. Are these groups infallible, free from the possibility of mismanagement, corruption, or crime? No, and neither are you or I. So, taking the tragic view, the question was not "Is everything perfect?" but "How could it be better, at what cost, and according to whose definition?" Put into which form, things appeared to me to be unfolding pretty well.

Read the whole thing here. Or just read some Adam Smith:

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.

Back in the 1st world

I've been travelling in India and Morocco for the last month, which I'll fully elaborate upon as soon as I get all the pictures. But first I need to get a handle on this subprime meltdown situation.

Guess where

Only sporadic violence marred the celebration. Last Wednesday, a stray bullet shattered a hotel window and struck and wounded a tour guide standing inside.

Yep, it's Mardi Gras in New Orleans.

Nation's Bachelors Demand Health-Care Coverage For All Their Buddies

That's today's Onion Radio News. Which of the candidate's would find this funny? When are we going to see an Onion debate?

Help is on the way in DC?

From the Examiner:

Columbia Heights is getting a new Target store, a Staples, new condos, a Starbucks, sit down restaurants, parking and other services. The new commerce is made possible because the local government provided initial funding (Tax Increment Funding TIF) for the projects. Mayor Adrian Fenty and several councilmembers unveiled a new $95 million TIF Tuesday to bring new development to other blighted neighborhood corridors. These include a total of $35 million for Georgia Avenue in Northwest, $10 million for Martin Luther King and South Capitol in Southeast.The H street Corridor in Northeast will see 25 million. Minnesota-Benning in Northeast will get $15 million and Pennsylvania Avenue in Southeast will receive $10 million.

What's not reported here is that Columbia Heights residents waited for these businesses for a decade or more. Columbia Heights has a tragic history going back to the 1968 riots. I've only observed it since early 2000 when I moved there. For seven years, the commercial center of the neighborhood, around the metro, looked like a moonscape - literally several acres of dirt. Until a Giant opened in the neighborhood in 2005 you'd have been hard pressed to find a place to buy milk. It remains to be seen if the sudden big box development will really produce a viable, organic neighborhood.

So why did this happen in Columbia Heights while surrounding neighborhoods, such as Adams Morgan and U street, and the city as a whole experienced a historic rebirth? The answer is that city bureaucrats essentially owned Columbia Heights, treated it as an urban planning experiment, and doled out the development rights to a single monopolist, unaccountable to the taxpayer. Columbia Heights never suffered from a lack of access to capital. It suffered from central planning.

A much simpler, more straightforward, and less discriminatory approach to revitalizing DC's neighborhoods would be to make them more attractive to business by reducing DC's notoriously high taxes and regulation.

Lower taxes lead to population growth

Wendell Cox, Peter Gordon, and Christian Redfearn have an interesting article in the new issue of Econ Journal Watch in which they refute Baum-Snow's conclusion that highways caused suburbanization. From Baum-Snow's abstract:

Between 1950 and 1990, the aggregate population of central cities in the United States declined by 17 percent despite population growth of 72 percent in metropolitan areas as a whole. This paper assesses the extent to which the construction of new limited access highways has contributed to central city population decline. Using planned portions of the interstate highway system as a source of exogenous variation, empirical estimates indicate that one new highway passing through a central city reduces its population by about 18 percent. Estimates imply that aggregate central city population would have grown by about 8 percent had the interstate highway system not been built.

As far as I can tell, Baum-Snow did not correct for local taxes, which is likely be a more important driver of population growth. For instance, Suitably Flip looks at state tax rankings from the Tax Foundation and population growth from the Census Bureau. He finds that lower taxes (especially on property) lead to population growth:

The trend is obvious even though this represents only one year of data (July 1 2006 -July 1 2007). I imagine the relationship is even stronger and more significant when looking at longer time periods.

Proposed macroeconomics syllabus

1) Watch Cinderella Man.

2) Read Anthony Evan's post on the causes of the Depression.

3) Read Snowden and Vane's Modern Macro.

4) Keep up with the various presidential candidates and their proposals to "fix" the slumping economy.

Gas war!

Apparently collusion is difficult to maintain at the pump:

Investigators say the confrontation started when the owner of the BP station on that corner went to the Marathon station to discuss with its owner why he'd dropped the price for a gallon of unleaded gas to $2.93 per gallon, three cents less than BP.

The discussion quickly escalated into a fight with two more people from the BP station brawling with rivals at Marathon. One man was hit with a baseball bat in the melee. And then, police say, the 51-year-old owner of the Marathon station pulled out a gun and shot the owner of the BP, a 45-year-old father of five children.

In a wild post-script, it appears the BP station is taking advantage of the shooting. While police are still swarming the Marathon station, the BP has jacked up its prices. WXYZ's Bill Proctor reports that as soon as the owner's body was taken away, workers at BP changed the price-per-gallon of unleaded from $2.96 to $3.09.

Imagine if we had that kind of competition at Metro.

Engineering Jihad

Tyler Cowen points to a great paper which connects terrorism to my former profession:

We can thus conclude that among violent Islamic radicals engineers are two to four times more likely to be found than the null hypothesis would predict.

Whether American, Canadian or Islamic, and whether due to selection or field socialisation, a disproportionate share of engineers seems to have a mindset that inclines them to entertain the quintessential right-wing features of “monism” – ‘why argue when there is one best solution’ – and of “simplism” – ‘if only people were rational, remedies would be simple’.

... Engineers turn out to be by far the most religious group of all academics – 66.5 per cent, followed again by 61.7 in economics, 49.9 in sciences, 48.8 per cent of social scientists, 46.3 of doctors and 44.1 per cent of lawyers, the most sceptical of the lot.

Further, the paper goes on to argue that engineers get dangerous when there is a lack of engineering opportunities, as is the case in most Muslim countries. Saudi Arabia is supposedly the main exception, i.e. there are plenty of opportunities there for engineers and so Saudi Arabian terrorists are not disproportionately drawn from engineers. But doesn't Saudi Arabia produce as many terrorists per capita as just about any other country? How do we explain that?

Banks v. credit unions

CEI just published an article I wrote on banks, credit unions, and field of membership. It's yet another story about special interests using government to block out the competition.

Don't follow leaders?

Economists don't talk about leadership too much, and sociologists seem to attribute leadership to the mystical magic of charisma. The only economic theory that comes to mind is Hayek's, which basically states that shit bags rise to the top because only shit bags would want to control other people. There's certainly some truth to that, but here I offer a more charitable view.

We choose our leaders based on the confidence they exude, since it's the best signal of expertise. No doubt this signal can be faked fairly easily for many people, but for the most part confidence comes with real expertise. And confidence is readily apparent. No need for credentials. The good news is that more and more people have access to the information necessary to create expertise, e.g. the internets. In other words, the world is moving towards a perfectly competitive market in information, where anyone can compete for expertise, and therefore leadership, in a given field. Thus, we have reason to believe that our leaders are better today than they were yesterday, and they'll continue to get better.

This is almost enough to get me interested in the presidential debates.