More on Economics as a Study, then some Ethics

© 2009 Joshua Stark

Paul Krugman has a good post today breaking down the real costs and benefits of some kind of CO2 emissions price. Unfortunately, his post gives two good reasons why economics is labeled the "dismal science."
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First, he immediately flies off into econo-babble-speak, which is a very logical place for him to be, Nobel winning economist that he is, and is also a logical language in and of itself. However, outside of the nerd-camp, it becomes nearly meaningless. I have a few reasons as to why, and I'll give you my kindest one:
1) Technical studies require special definitions;
2) Economics is a technical study of mundane human behavior;
3) Therefore, economics uses mundane words with specialized meanings, and also makes up words to describe things that are so common or mundane to humanity that we hadn't named them.

I have other, more conspiracy-minded ideas, too, but I'll leave those for another post.

Here I've decided to clarify Prof. Krugman's description in good standard English, as much as I can - which is funny, because I have to start off by giving a nerdy name to a very mundane concept: When somebody sells something to somebody else, sometimes things happen that affect people outside of this transaction. For example, when you drive to the grocery store, your car pollutes a tiny bit. That tiny bit may aggravate somebody's asthma, somebody not even at the store. That external thing there is called an 'externality'. There are good ones and bad ones.

Now that externalities are understood, here's Krugman's post, in easy speak and without the comments about other people (which is probably the only reason why Krugman gets the NY Times and I have to settle for a poorly edited "letter of the week" in a local alternative weekly... yeah, right):

Carbon emissions cause negative externalities. We can put a price on them to make people polluting them realize the true cost of that pollution. We can do this by taxing carbon emissions, or by creating a market for trading carbon emissions while limiting the amount of total carbon allowed. When we do this, the cost of these things will go up, and so will the benefits of not polluting. The true cost or benefit of putting a price on pollution, then, is benefit-cost.

Thank you.

Okay, now that this is clarified, I want to point out the ethical causes and implications of pricing externalities. The ethical statement being made here is that people should pay for the true costs of their economic activities. If you believe that (I do), then you should consider the best ways to accomplish that goal. The second ethical consideration is over who, exactly, should get the money from the new, true price: Government, producers, or consumers. I'll leave that for another post, too.

I don't mean to belittle Prof. Krugman's post, and if you love Harberger Triangles and debates between the freshwater and saltwater schools, or if you even just want to get a basic understanding of economics from within, he's a good writer. I just think that some reasonable people get left out of much of economics talk, and that hurts economics as a topic.

Now, imagine if they required locally grown, grass-fed beef!

© 2009 Joshua Stark

A quick snap-shot, from Stephen Von Worley's blog Weather Sealed, on the location of every McDonald's in the Lower 48:
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Besides my title post, I'll leave the commentary up to you.

Climate change and impacts on the bottom line

© 2009 Joshua Stark

Very, very often these days, government management conversations must include "economics", a series of arguments around the costs and benefits of particular programs in terms of direct dollars and jobs. Unfortunately, the "economics" to which I refer isn't real economics, but more akin to a quotation attributed to Benjamin Disraeli, that there are "lies, damn lies, and statistics."
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Economics is real. It is not mathematics, it is not a hard science, and in those cases it is therefore much more like the real world than the previous two. However, humans use boxes and models and discrete hypotheses to help us understand the world, while recognizing the truth of what, for example, Magritte is saying here:


Sadly, most conversations around proposed and existing programs are merely ways to use the public perception of economics as a hard science and math, poorly apply a theoretical model from economics, and pass it off as an A + B = C argument. Then, they roll that argument up into a tight cylindrical object, glue it together with pathos, and hit their opponent with it as hard as they can.

So it is with great happiness that I offer some refreshing examples of real economics.

The first is a report on a University of California study about rents and 'green' buildings. The Fresno Bee's opinion does a good job of capturing the idea, and it is something to consider if you own rental property. Basically, the article points out the financial benefits of improving the energy efficiency of property, but it includes what it calls the "intangible value of the Energy Star label." It's funny, because the previous paragraph made tangible, financially, the Energy Star label, and yet this comment is still true, and it goes to a point I made over and over when I taught economics: Trust is as vital to a well-functioning economy as informed self-interest.

Really, Adam Smith's hand isn't invisible, it's the one you just shook when you made the deal. If you don't trust that hand, you won't shake it. What Energy Star and other government programs can do is help ensure that trust. For example, why do we keep our money in banks right now, during the largest economic downturn since the Great Depression, and with 94 bank failures this year alone? The FDIC, that's why.

In Energy Star's case, we get a guarantee that the product has met certain conservation requirements, and that is important in increasing value, not just for the environment, but for people's costs, too.

The next one is a report from the Washington Post on the flip-side of climate change: Not fixing it will hurt many companies.

Of course, many other companies may benefit from climate change, and there will be people trying to create wealth from what we'll have (life and lemons and all that), but the biggest problem of climate change for most companies is the uncertainty of it all. Trust is vital for individual transactions, but it is also important for the overall climate, and that goes for the economic, social and political climates as well as the physical one. A prime example of this is shipping, which many say has benefited from climate change opening up the Northern Passage. However, since we aren't sure what will happen in the future, imagine putting all your boats into those waters, and then getting an ice-up the next year, crushing all those boats and cargo. Kinda dampens your guarantees for timely delivery of merchandise, no?

The last is an entry at Prof. Kahn's blog, Environmental and Urban Economics (another witty title, like mine!), where the good professor quotes the President of Hamilton College, Joan Stewart. This is a small story, but it provides a great example of the intersection of macro- and microeconomic thought.

President Stewart argues that it is not in the best interest of the college to put solar panels on a particular building during renovation, and she gives a wonderful list of reasons. Now, what would encourage her to either put those in, or at least obtain clean energy from another source? The bottom line. She explains very succinctly the costs and benefits of those particular panels, and I applaud her for these efforts. On the broader scope, then, it is vital for us to include the additional costs we've been dodging in our personal lives, but it's hard for us to understand the individual economic impacts of climate change, or bad air quality or water quality. Perhaps we have asthma (1 in five kids in California's Central Valley does), or we farm and realize lower yields with dimmer sunlight (also a problem in the Central Valley). These effects help to quantify it for some, but beyond them, we don't grasp the weight of bad environmental choices upon our lives.

This is where macroeconomics and democratic institutions step in. We don't have to understand the individual impacts, we can try to grasp their totality instead, and then try to alleviate them by, for example, making the costs of bad air quality a financial matter up-front, rather than a health and financial matter after the fact.

It's good to see some solid economics around these issues, but it's also important to understand the limitations of economics. It is a tool, like others, to be used for us: Think of it as the study of trade-offs. But, it is not a pipe. It is only a picture.

You can't sell Conservation

©2009 Joshua Stark

It's a fact: You can't sell, "buy less."

This sounds silly, but frankly, this is a huge hurdle for the conservation/environmental community, because the overwhelming majority of our communication is funded by advertising and marketing.
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Consider newspapers, magazines, television, the internet. Ironically, the proliferation of 'free' advice, news articles, recipes, etc., has had a magnifying effect on advertising and marketing. Everywhere we go, from computers to urinals, we see advertisements, to help cover the costs for the advice you get when you google "how to hunt wild pigs" or some such thing.

This is understandable. People's time is worth something, and so is their expertise. However, this becomes problematic for a community whose name means "to use sparingly".

This idea struck me as I was standing in line at a local grocery store. I noticed a number of magazines whose purpose was to teach frugality, budgeting and such things. The first thing that popped into my head was, "okay, I'll start being frugal by not buying a magazine." As I was driving home, it really came home (this happens because I often drive a car with no radio) that conservationists and environmentalists have a problem here. Our community has realized that a huge part of our impact is our disposable economy, the number of single-use, individually wrapped items in our markets.

Nowhere is this dichotomy more present than in the hunting industry. From actual hunting implements to scent eliminators and wind detectors, hunters are inundated with new products each year, and every hunting magazine spends inordinate column-space on the top 50 products, or the year's newest and best. At the same time, many hunters choose hunting as an atavistic activity, a way to take their food honestly and with skill, while hoping to 'get back to nature' in their endeavors.

Let's face it: Most of the new stuff is cool (with the exception of a "Euro" look I've seen on some shotguns, which is hideous). Designers do a good job in using packaging, fashion, politics, and other ways to sway folks towards a purchase. But, most of the new stuff has also been manufactured where labor is cheapest, and shipped thousands of miles.

Meanwhile, we worry about impacts on the habitat and resource, and we get really angry when we come across blatant littering and waste.

Well, my one, small suggestion when considering this dilemma, at least for hunters, is to consider exactly what we admire. We often appreciate the older guns, the leather and oilskin products whose wear and scars don't come at the factory, but from years of reliable use. We admire maintaining and becoming familiar with our equipment. We strive for self-sufficiency.

Which of these traits is compatible with buying a new one every year? Which do we usually hold in higher regard, the hunter who just bought a brand new over/under, or the hunter who has hunted with the same old pump gun for 25 years and has limited out most times?

Folks have to make a living, this is true, and with our economy in its current shape, retailers are hit especially hard. But, for these reasons, for the long-term health of a sustainable economy as well as helping habitat, we should consider practicing with our current equipment, waiting and buying only those pieces of equipment that will foster those traits we admire most about hunting and good hunters, and also seriously trying to purchase American made products when we do decide a purchase, even if it costs a few dollars more.

The end of a California session with some looming good news

© 2009 Joshua Stark

If the Governor will sign them, we will have some good news in California over renewable energy.

Heading to the Governor's desk:

Two bills (AB 64 & SB 14) that would require 33% renewable energy from electrical utilities by 2020;
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a bill (AB 920) that would force utilities to pay individuals for surplus solar energy created in their homes (right now, companies don't pay for much of the extra energy, but certainly charge folks for its use);

and a bill (SB 32) that would allow individuals to produce more energy in their homes for sale to utilities (right now, they are capped; this would raise the cap).

So, I'm a bit happier about this year, especially because of the last two bills. The first one will create some habitat pressures in the California desert, which I'm hoping will be alleviated by the other two bills as well as the force of the Endangered Species Act causing big changes in the way the Central Valley of California does business. I'm hoping, in particular, that the Central Valley will see that it's best chance for re-invention, renewal, and growth will be in 'farming' solar power, which will necessitate and aid better air quality, as well as create better paying and permanent jobs, and lessen their "need" for Delta water.

Also, the Governor has the chance to sign AB 1404, which caps the use of offsets in any carbon market California uses to 10% of total emissions. Offsets are things companies can buy instead of cutting their emissions, such as renewable energy credits or Amazon carbon sequesters (trees in a rainforest). This is great because offsets really get to be easy ways out, and over-complicate our attempts at actually cutting greenhouse gas emissions.

So, it's up to our Governor, and I'll leave it at that.

Not a victory, but not a catastrophe, either

© 2009 Joshua Stark

The Delta water bills the State of California did not pass yesterday (or this morning).

I am relieved at this. The environmental community is torn over this issue, with normally-allied groups taking different sides. But, it is a controversial issue, and a big issue.
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For those of you lucky enough to be out of the loop, let me sum it up: The Sacramento-San Joaquin Delta is in Northern California, just East of San Francisco Bay. The entire Sierra Nevada's West slope, in addition to much of the Trinity Alps and some of the Cascades, drains into the Delta. It provides water for 25-30 million Californians on any given day, in addition to watering the richest agricultural zone in the country, as well as the largest metropolitan area in the country, both of which hundreds of miles away.

To sum up the history of California's water issues, I'll quote Mark Twain: Whiskey is for drinkin', and water is for fighting over. That's how long this has lasted.

In recent years, some have advocated for a new canal to be built around the Delta, because of problems associated with water pollution, salinity, and old levees in the Delta. Recently (coinciding with a nearly 80% increase in pumping to the South in 2001), the Delta ecosystem has almost completely collapsed.

The new canal would avoid these problems for water users in the South by diverting clean Northern California water around the Delta. Can you see the problems a Delta-born River Rat like me might have with a canal? We need fresh water to deal with all the pollution problems Central California sends our way from their rivers, in addition to supporting our own ecosystem and agriculture.

Proponents of a canal believe that, so long as it is "eco-friendly", a canal is the only way to go. The real problem, however, is that too much water is dedicated for places other than the Delta. It needs a certain amount of fresh water, and it doesn't get it. My counter to folks who claim there can be an eco-friendly canal is to ask them to support a dam with similar impacts and costs; but, none in the environmental community will support anything called a dam. I respond, then do not support any canal that equates to a dam in its impacts (downstream flow, construction, land & energy used, etc.). If I had the money, I'd buy billboard space to make this claim.

I hear from canal-proponents that if we don't do something, the Delta will collapse, and people will also not get the water they need. I contend that we are doing something, we are carrying out the Endangered Species Act, and stopping pumping during critical times of the year. As a response to other regulatory actions, people have been forced to better conserve water (Look at the aftermath of Mono Lake), and these results should be no different.

There are many political machinations at work on these water deals, the worst an attempt to give decision-making authority to pro-canal forces through a tiny group of appointees (seven) who would get to decide water policy for upwards of 30 million of us, and millions of acres of habitat and ag. land. But before I, or other voices from the Delta, will give one more acre-inch of water, we want to see everybody doing all they can to conserve our water.

For starters, the city of Fresno can cut its water consumption from 280 gallons per person per day (the US average is around 100).

One Big Ethical Problem in Government

© 2009 Joshua Stark

And it's not what you think. I'm no anti-government individual; my Uncle suffered through Bataan for something, and the only thing that makes America is its free and active, democratic, political institutions, which provide us the framework for everything else.

I've been unable to add to this blog, recently, not because we lack environmental ethics issues, but because I've been inundated with them at work and through friends & family. For example, I just got off the phone with my cousin, who had an encounter with a hunting guide who just leaves his empties because the river will flush them out. And that's the smallest one. So, when I get home, the last thing I want to do is hash out some ethical or environmental problem.
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This last week, I've been in a back-and-forth at the Sacramento Bee's website, in a debate with an anti-hunter about the nature of hunting, killing, and wounding. It comes in response to an article by Holly Heyser over at NorCalCazadora. The article is here, and if you scroll down to the bottom, you'll come across my comments (as JStark7777) opposing one MonicaZ. She is civil, and has some strong feelings. I feel good about what I've written. Also, Holly's article is great!

But the biggest issue on my mind lately has come from the looming doom over the California Delta, and just how badly the Legislature will screw it up in the hopes of doing something this year. The last few weeks, the Senate President pro tem, known for banning water meters in Sacramento, removed from "debate" the only Senator representing the Primary Zone of the Delta, or what we folks from the Delta like to call THE DELTA. Our Senator Wolk had authored a bill in the mix, but she wasn't allowed to work on its final appearance, because, says the Contra Costa times, "Steinberg said he could not be assured she would vote for the final product. As a Sacramento lawmaker, he said, he would represent Delta interests." How's that little, refreshing bit of truth in politics and reporting? Well, half of it, anyway. It's interesting to note that he could be assured of his own vote, without even knowing what the 'final product' would look like.

This issue has taken a lot out of me. I've had a conversation with a prominent political writer who mistook "upstream" for "North of". I've had conversations with farm labor organizers leading groups of concerned workers into the Capitol, wanting more water for the parched Central Valley (and, some say, who had been threatened into attending), but who have never spoken with farm labor in the Delta. But, the worst conversations I've had have been with "special interests", in particular environmental groups, who think that the only politically feasible thing to do is to back the majority, and accept a peripheral canal. It's this last point where I dive into the realm of applied ethics and politics, and tangentially, environment.

In my time, I've had a lot of "political feasibility" conversations, and though they have often left a sour taste in my mouth, I hadn't really stopped to ask why, except to note that advocates for a cause shouldn't concern themselves so much with political feasibility. Political feasibility is the reason we vote representatives; it's their job to make the deals and decide yes or no.

And, that's it. Last week, driving home alone from my last day of bow season, it struck me: Political advocates, what many derisively call "special interests" should not concern themselves with political feasibility.

First off, I do not deride special interests. We are a democracy, and to condemn those who participate makes no sense. In fact, if one reads the Federalist papers, one comes away with a profound sense that democracy only works when folks make their interests plainly known, and so I applaud organizing for one's interests. However, to point out again that democracy only works when folks make their interests plainly known, it is imperative that organizations created for particular causes be completely honest and plain in defending those causes.

For years, environmental organizations had been brow-beaten because of their staunch, unyielding support for what some thought were wacky ideals. However, over time, some of these organizations became successful, and organized political actions that gave them the ability to wheel-and-deal. Now, a few of these groups are multi-million dollar outfits, with authority and responsibility. Unfortunately, this means that they do not always passionately advocate their cause (from the oath lawyers take), and sometimes give up the "perfect" for the "good."

I offer that this is not only not their role, but that when political advocates pursue political feasibility instead of their stated goals, they actually damage democratic institutions. Political deal-making for general progress is the role of politicians, this is why we elect representatives; this is not why we join organizations. When those power-broker organizations self-censor, they remove from the public discourse information vital to democratic institutions, they warp the understanding of subjects (because they are often experts in their subjects), they warp the perception of their constituents' desires for protection, and, in time, they lose their own goals.

If you've made it this far, please comment.