Whither the Keystone XL?

It’s been a while since the status of the Keystone XL pipeline was the hot topic. Since then we’ve seen, well, you know what else has been going on in DC. But, despite that, the pipeline is not forgotten–though there is still a contingent who would like us to forget the whole thing:

Choosing to make their opposition to the pipeline its marquee position was a strange strategic blunder for the green movement, simply because the pipeline itself isn’t the thing hurting the earth, or causing climate change. True, the Canadian oil it will transport to Gulf Coast refineries is of a particularly dirty and low-quality variety, but if President Obama chooses to nix Keystone, that oil will still find its way to market, whether by truck, train, or alternative pipelines. Keystone would just be the most cost-effective, safest option, but blocking it won’t shut down Alberta’s tar sands production.

Succinctly put. Let’s see if the President feels the need for a bump up in the polls. Who knows? We might yet see the pipeline in our lifetimes. Not to mention the longest bike trail in the US.

The Economics of Encouragement

I suppose that it should come as no surprise that economists are the in the business of life coaching, though as Ms. McCardle observes, they are only going part way:

College improves your earning prospects. So does marriage. Education makes you more likely to live longer. So does marriage. Yet while many economist vocally support initiatives to move more people into college, very few of them vocally favor initiatives to get more people married.

She goes on to note that:

[A]ll economists are, definitionally, very good at college. Not all economists are good at marriage. Saying that more people should go to college will make 0% of your colleagues feel bad. Saying that more people should get married and stay married will make a significant fraction of your colleagues feel bad.

So, perhaps they are not life coaching so much as they are providing a very limited perspective from where they stand. And, since an economist by definition is usually a college graduate with a job, they may not be the best people to speak to the benefits of college. Yes, it worked for them, but that does not necessarily translate to not-them.

The other thing I would note is that telling a young person to go to college is culturally acceptable. Telling the same person to get married is often considered a massive invasion of his or her privacy and taking an improper interest in something which is deeply personal, etc.

Bottom line? Economists are as cowardly as the rest of us when it comes to dealing with difficult issues.

Coin Collecting Run Amuck

Word is that some are seriously considering letting the US Treasury mint a coin with a created value of $1 trillion. I’m almost ashamed to spend any digital ink on this, but I the idea should discussed and have the light of reason focused on it. Megan McCardle does a bit of shining:

I hope you’ll pardon me while I go off on a rant here.  The trillion dollar platinum is an absurdity wrapped in a legislative incongruity inside a farce.  It is the logical extension of an utterly illogical legislative process that only becomes more irrational with each passing day.   Each partisan battle has become stupider than the last.  Silly loopholes are exploited for bargaining power, and the resulting stalemates are generally solved with a temporary patch that solves the immediate problem by creating a bigger one down the road.  When the bigger problem arrives, naturally the other side seeks an even sillier loophole, resulting in an even more temporary patch.

Exploiting loopholes is a horrible way to run country. Of course, the more thousands of pages of laws which are written (and then backed up with 10s of thousands of pages of regulations) the more we see the massive increase in loopholes. Not to mention people whose job description almost comes down to exploiting them: lobbyists. I’ve nothing against lobbyists, per se, since they are simply making the best of the situation in which they find themselves. But the system which gives them so much power is something which needs to be changed.

You know how we wouldn’t be having discussions about trillion dollar coins? If we simplified things: the tax code; the functions of government; the relationship between income and outgo (1:1) and so forth.

I’ll close with a final word picture:

An ADHD day trader with a cocaine habit and six months to live has considerably more long-term planning skills than our current congress.


Deliberately Ignorant or Thinking Clearly? UPDATED

The US Congress has not provided a budget in three years. Paul Ryan proposed a budget recently which could substantially changes the downward trajectory of our economy (public and private). Obama’s press secretary Jay Carney is having none of it:

“You have to be aggressively and deliberately ignorant of the world economy not to know and understand that clean energy technologies are going to play a huge role in the 21st century,” Carney said after decrying the clean energy spending cuts in Ryan’s plan. “You have to have severely diminished capacity to understand what drives economic growth in industrialized countries in this century if you do not understand that education is the key that unlocks the door to prosperity,” he added.

What clean energy (aka green energy) has to do with education is a bit beyond me, but if this is the best Carney can do, the advertisements will pretty much write themselves. Education would include telling people about the following: Solyndra, Beacon Power, Ener1, Fisker, and Tesla. Are these all examples of the role which is being played by clean energy in the 21st century? If so, is it not time that we stop paying billions for these roles to be played?

If anyone is being played here, it is Mr. Carney. Kudos to Mr. Ryan for proposing a plan that might actually work.


Speaking at another one of those clean energy companies today:

Obama mocked Republicans for having a lack of imagination and dismissing clean energy technologies just because they are new. The president says America must take risks and stay ahead of the curve in order to be competitive.

Mr. President, “clean energy technologies” are far from new. Yes, there have been new developments, but we’ve been pouring money into solar energy for 40+ years without seeing the rewards that we were told were just around the next corner. We don’t dismiss the technologies “just because they are new” but because they do not match up with expectations–decade after decade.

Who is being deliberately ignorant of the realities of clean energy, again?

Chinese Are Revolting

In a little (by Chinese standards) fishing village of 20,000:

“For the first time on record, the Chinese Communist party has lost all control, with the population of 20,000 in this southern fishing village now in open revolt.” So begins Telegraph correspondent Malcolm Moore’s report of what he has personally witnessed in the fishing village of Wukan, Guangdong over the past few days. Enraged over government land grabs, villagers have now overrun local authorities and driven police out. They remain barricaded within their village, roadblocks set up by both police and villagers preventing food and water from entering.

It would seem, based on the information linked in this article, that the people started with some serious issues which their local leadership was unable or unwilling to address. Now, at least one person has died while in the custody of the authorities and the situation grows worse.

When a government fails to protect its citizens from itself, there comes a point where the people believe they have no choice but to take back control of the situation. In this regard, the situation in Wukan might speak to the beginnings of a new Chinese revolution. Of course, the authorities might simply squash this uprising by sending in the police and army and carting off the entire population to be reeducated.

At this point, it is hard to know what to do for these folks other than to spread the word.

May Life Never Be Fair

PJ O’Rourke:

The good things in life are remarkably expandable, but it’s ordinary people who expand them. Look at China, look at India. Yes, it’s upsetting that some people have so much while other people have so little. It isn’t fair. But I accept this unfairness. Indeed, I treasure it. That’s because I have a 13-year-old daughter And that’s all I hear, “That’s not fair,” she says. “That’s not fair! That’s not fair!” And one day I snapped, and I said, “Honey, you’re cute, that’s not fair. Your family is pretty well off, that’s not fair. You were born in America, that’s not fair. Darling, you had better get down on your knees and pray that things don’t start getting fair for you.” [emphasis added]

I am grateful for all the things I should have/be/do and don’t.

Are you?

Patterns, Anyone?

Solyndra. Sounds like a name for a little girl. We now know it as the face of a one half billion dollar mistake made by the President. Now it turns out that this is not the only alternative energy company which took the money and ran itself into the ground.

Here’s the thing. If I break a glass–it’s probably because I made a mistake. If I break a glass every day–I’m not clumsy, I’m stupid. Something needs to change–and it is not the shrinking collection of glasses.

The President and his advisers seem constant in their belief that sufficient desire and money will allow them to bypass the rules of physics and economics. In the case of Solyndra, it has come out that the company knew its competition was producing equivalent product at much lower prices–but it still kept going, burning up money backed by the taxpayers until it was all gone.

Other companies have similar stories of a Disney disregard for the realities of the marketplace. Dreams which are in contravention to reality do not come true, no matter how many stars one wishes upon–or how many stars give press conferences on one’s behalf.

Safety and Unsafety

A very interesting take on systems and safety and complexity. Tim Harford commenting on the book Normal Accidents:

But one thing that comes out of the book is the idea that we tend to make systems more complex by adding safety systems on top of them, and that the safety systems themselves create new ways for things to go wrong. That was a key problem in the financial crisis. A lot of banks were taking bets and then insuring themselves with credit default swaps (CDS). Credit default swaps were, basically, insurance contracts that banks wrote, often with [the big insurance company] AIG. Or banks were repackaging sub-prime mortgages into vehicles that were supposed to make risky loans safe. These two innovations – the packages of sub-prime loans and the credit default swaps – were both safety systems. But they were both absolutely crucial in explaining why the system blew up. I think that’s a central and really useful idea, that these safety systems are probably not helpful – and even when they are helpful, they will have unintended consequences.

Interesting, no? Complexity adds risk–even if the complexity is intended to mitigate risk. He closes with the following:

It’s a bit like climbing a mountain. You’re roped together, and you think the rope is making you all safer. Then, suddenly, a couple of people fall off. You realise that it’s the rope that’s dragging you all off the cliff – even people who were never in trouble themselves.

Practically, this is why you never, never, never co-sign a loan for anyone.

HT: Newmark’s Door