The sardonic Adam Smith

In reality high profits tend much more to raise the price of work than high wages. [...]In raising the price of commodities the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

- Wealth of Nations, Book 1, Chapter 9

Rhino poaching... Hope on the horizon?

A few months ago, I discussed the staggering increase in rhino poaching that is plaguing Southern Africa. According to the Dept. of Environmental Affairs, a record 448 rhino were poached last year in South Africa alone. Even that record is now under threat, as 159 of the country's rhino had already suffered the same fate within the first four months of 2012.

Source: Business Day

My preferred, economic solution would involve overturning the CITES ban on rhino trade, which has not only failed to stop poaching, but has rather encouraged the reverse. The ban has simply succeeded in limiting the supply of rhino horn, thereby driving up the price and making them more valuable to would-be poachers. I'd like to see this perverse set of incentives replaced with something more reasonable. As I wrote wrote back in 2011: "[T]he ability to legally farm and 'harvest' these animals generally would bring the same positive effects that hunting does for wildlife conservation. That is, it establishes a profit motive that incentivises the preservation of valuable animal species."

Ethical considerations notwithstanding, I did have some lingering concerns over the practicals implications of farming these animals, and whether doing so would actually lead to a collapse in poaching. Breeding rhino remains a very expensive business and poachers would still be able to capture substantial "resource rents" as long as they don't bear the burden of the investment costs. In the same way that cattle theft hasn't stopped despite our massive consumption of beef and dairy products. Of course, the potential gains -- i.e. the rents -- are also far higher when it comes to rhino. That being said, it seems unquestionable to me that the economic incentives for sustainable populations are much better aligned under a system of legal trade.

Thus far, the SA government is pretty tight lipped on the legalization of farmed horn. They are, however, considering the sale of horn stockpiles, which have been accumulated from thwarted poaching operations over many years. I maintain that the farming option is necessary to ensure ultimate sustainability. Nevertheless, we could think of the stockpile sale as akin to the auction markets for organ donors and other "ethical repugnant" goods. The pioneer in this area is the economist, Alvin Roth, whom I briefly discuss here.
Anyway, I've been thinking about how I might turn this rhino question into a legitimate research topic and, possibly, one of my dissertation essays. Trouble is, the basic concept is so simple that any of the standard bioeconomic models would suffice i.t.o. providing a theoretical framework. In other words, you probably wouldn't be making enough of a theoretical contribution for it to be considered worthy of publishable (i.e. doctoral) research.

To be considered of suitably high standard then, you'd need to supplement standard theory with empirical evidence. And here we run into another problem. What data could one use, beyond basic descriptive statistics? Moreover, how would you control for all the problems that typically come with empirical research -- identification, causation vs correlation, establishing a counterfactual, etc? In short, turning this into an original and insightful research project probably requires the use of some kind of natural experiment. Perhaps a policy change that affects some countries in the region, but not others. Hmmm...

Zimbabwe, Botswana, Zambia, Namibia and Angola are heading for a collision with rhino conservationists after it emerged that their governments had agreed to the sale of rhino horn powder in clinics and pharmacies. 

The governments of the five states that form the Kavango-Zambezi Transfrontier Conservation Area (Kaza) met in Namibia last week and resolved to sell rhino horn powder in their fight for the survival of the species which is fast heading for extinction.

Okay, it's probably not quite what you're looking for. Most obviously, legalizing the sale of powdered rhino horn in these five African states would have a negligible impact on satiating overall demand. The situation will probably only improve once the reform reaches the major Asian markets, such as Vietnam. Still, I'm very tentatively going to call this a step in the right direction.

For more on this whole rhino debate, here is a recent article worth reading.

Earth Hour: Sending the right message?

In the build up to this year's Earth Hour, humourless critics were once again up in arms about the fact that turning off the lights for one hour would have a negligible effect on energy consumption.

Yes, because symbolic acts should be seen as outright solutions, rather than symbolizing representing solidarity with some wider issue. You know, like Tommie Smith and John Carlos thought that the solution to racial discrimination would be for everyone to walk around with an upraised fist.

Sounds to me like a lot of people could use a course in symbology.



That said, there are reasons to be critical of Earth Hour and, indeed, question the symbolic message that it does send. In that light, one of the better "contrarian" takes that I've read lately comes from Robin Mills, who argues that good intentions are undermined by a misguided signals:

Of course, improved energy efficiency is vital. The confusion is between conservation -- doing less -- and efficiency -- doing more with less. 

[snip] 

Environmentalism should not be about less -- it is about more: energy that is more abundant, cleaner, cheaper, more secure; economies that grow faster with new technologies; more people escaping poverty. 

Darkness spreading across the planet should not be the aim of environmental campaigns -- it should be a symbol of what happens when energy and environmental policy fails.

Environmental organisations like the WWF (or any advocacy group for that matter) need to think hard about the broader associations that come with their campaign messages. Concern about the planet's well-being is clearly laudable, but they will lose this fight if their cause becomes associated with privation.

Casting further doubt on Bob's "Heartland" arguments

Bob Murphy's whole spin on the Heartland / Peter Gleick affair really bothered me. At first, I just dove straight into the responses without doing a lot of back research, or even retracing my own steps in coming across the leak. Having done that now, I can safely say that I feel even more confident of my main assertions. In other words, I hold that Bob's article framed the climate debate in very misleading terms, while he was glibly uncritical in his analysis of 'Team Skeptic'. I also continue to hold serious doubts over claims that Gleick wrote the false strategy memo.

However, I want to leave such matters aside today and follow up on (what I take to be) the central theme of Bob's post. In particular, the idea that the "alarmist" blogosphere betrayed a major misunderstanding of the skeptic position via its  fixation on the bogus strategy memo. Or, in Bob's words: "[I]t reveals that these people really have no idea how their opponents on the climate issue actually view the world. So when they dismiss skeptics as having no legitimate arguments, it should make outsiders take pause."

In rebutting this claim, I'm going to divide up this so-called "alarmist" blogosphere into three categories, based on their coverage of the Heartland saga. By doing so, I aim to show that: (1) A number of very prominent pro-AWG blogs and websites didn't cover the leak at all, (2) Others did, but paid little or no attention to the fraudulent strategy memo, and lastly (3) Of the bloggers that did cite the memo, the vast majority were very quick to acknowledge its compromised nature and remove the offending content from their websites. These and some additional facts should seriously cast doubt on the notion that climate skeptics are more reasonable and judicious than their opponents.

This post continues under the fold...

Bob Murphy on Heartland and Gleick

Bob Murphy is probably the one "Austrian" school blogger that I make a sincere effort to follow. I don't agree with everything -- or even most -- of what he writes, but Bob always manages to present his thoughts in an insightful and humorous way. More importantly, I think that he a) Genuinely tries to be fair to his intellectual opponents, and b) Actually has a good grasp of what "mainstream" economics is about (unlike some others). While I enjoy reading his blog, I generally shy away from commenting there... if for no other reason than I know how time consuming internet debates are. However, I decided to respond to his recent post on the Heartland Institute / Peter Gleick affair.

If you don't know what I'm talking about, you can have a gander at Bob's post to see how the whole thing went down. In short, water scientist and AGW proponent, Peter Gleick, claims to have received an anonymous package containing an apparent climate "strategy memo" from the Heartland Institute. Among other things, this document made some pretty wild claims about how to advance "Heartland's" skeptic message, including the money line that they should focus on strategies that would be "effective in dissuading teachers from teaching science". Bob claims that this suggestion is so obviously bogus that anyone reading it should immediately have twigged that it was a fake -- as, indeed, Heartland later confirmed.

Now, I'm not entirely sure if it was as blatantly obvious as all that... especially if you know anything about Heartland's very dubious history when it comes to scientific matters. However, Bob's point that the pro-AWG blogosphere should have been far more circumspect about the whole thing certainly deserves full consideration.[*] At the very least, let me emphasize that I am not disputing its fraudulent origins here. Regardless, we do know that Gleick subsequently obtained legitimate funding documents under false pretenses by impersonating a Heartland board member. These were then released together with the fake strategy memo. Unfortunately for Gleick, Heartland very quickly cried foul and he was eventually forced/motivated to come out as the source... effectively tarnishing his reputation as an ethical scientist in the process.

You can look through the comments under Bob's post (and the follow up) to see my extended thoughts, but my main points are this:

1. Criticizing Gleick for going under an false name to obtain private documents is very fair game. That so many pro-AWG climate bloggers initially failed to spot the "obvious" (Bob's words) forgery amongst the legitimate documents should also be cause for introspection by that camp. However, where was the equivalent moral outrage from the skeptic camp when the hacked "Climategate" emails were released? For all their indignation at Gleick's actions, Heartland itself was only too happy to cheer on these emails when this suited its agenda... despite their illegal origins and a raft of investigations and subsequent exonerations. It's also very disingenuous to pretend that a lot of skepticism isn't founded on distorted and manipulated use of science, because it certainly is. (Example A: Cherry-picking of evidence and selective quotation of the Climategate emails.)

2. Similarly, I feel that Bob is trying to paint this as some false dichotomy, where the debate only exists between measured skeptics and rabid alarmists. This simply isn't the case.

3. Despite his unethical behaviour, I don't think that Gleick wrote the false strategy memo. It just doesn't add up. As I wrote here: If you wrote that document, you knew it was bogus. And if you knew it was bogus, you’d have to know that Heartland would protest loudly and immediately as soon as it was released. The truth would out fairly quickly; as indeed it did. [...]You don’t need a course in game theory to realise that [simply no good could] come from releasing a document that you know to be fake… Much less owning up to being that moronic in public. Gleick has his faults, but I certainly doubt that he is *that* dumb. There's a lot of uncertainty whichever way you cut it. However, my best guess for the source of this false document is that it was written by some anti-AWG person or group who wanted to trick Gleick into releasing bogus info and thereby undermine his credibility. (There are other possibilities too... though, again, none are completely satisfying.)

UPDATE: This is interesting. Running stylometric and textometric analysis on the fake strategy memo suggests that a Heartland staff member is more likely to have written it than Peter Gleick. (There's still a lot of uncertainty, but it does take consideration of the fact that certain sentences were apparently lifted from the authentic documents.). Not only that, but how did "Heartland-aligned blogger Steven Mosher" manage to finger Gleick so confidently before he came out as the leak? The plot thickens...
UPDATE 2: This analysis using the same software suggests the exact opposite that, i.e. that Gleick is the more likely candidate. Oh, the confusion!
UPDATE 3: Climate scientist James Annan thinks that textometric analysis is a complete waste of time. He also argues (quite plausibly I must admit) that Gleick *could* have been shortsighted enough to write the fake document himself: "Under pressure of time and under great stress, he wasn't thinking that clearly at this point..."
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[*] Two important issues bear mentioning here. First, Bob's analysis relies heavily on the reporting of Megan McArdle, who was quick to urge caution about the legitimacy of the strategy memo despite her strong endorsement of AWG theory. Second, while most pro-AWG climate blogs have removed and distanced themselves from the controversial memo, the original outlet for the leak, Desmogblog, are sticking to their guns w.r.t. it's authenticity. (More from them here.)

Quote of the day - Rebellion

After the previous post, I'm afraid it's unavoidable:

"If they give you ruled paper, write the other way."

- Juan Ramón Jiménez

Then, via the GF and her sorcerer's ways design awareness, take a look at this novel writing pad...

On censorship and misreading Ray Bradbury

Earlier today I read Bill Maher's op-ed in the NYT: Please Stop Apologizing. I deeply agree with his general point and am reminded of the way he put it -- rather more bluntly -- some months ago on his show Real Time: "Stop organizing life around the people who don't get the joke. Fuck them if they don't get [the] joke."

Touché.

Ricky Gervais is often quoted as making the same point, but in a milder form: Just because someone is offended, doesn't make them right.

Going back to Maher's op-ed, I couldn't help but think, as I inevitably do when the topic of censorship comes up, of Ray Bradbury's dystopian classic, Fahrenheit 451. I read the book in high school and my abiding memory -- apart from a great opening quote and the central irony of firemen actually setting fire to things -- has been that it was meant as a warning against the dangers of censorship.

I'm surprised to learn, then, that Bradbury actually disputes this as being the major theme of the book. The Wikipedia page has a decent summary of things and also links to the following video clip from Bradbury's website:

In his own words: "I wasn't worried about freedom, I was worried about people being turned in morons by TV."

The Wiki entry also links to this LA Times article that was written after Bradbury was awarded the 2007 Pulitzer Prize. The following passage caught my eye:

[Bradbury] says the culprit in Fahrenheit 451 is not the state — it is the people. Unlike Orwell’s 1984, in which the government uses television screens to indoctrinate citizens, Bradbury envisioned television as an opiate. In the book, Bradbury refers to televisions as “walls” and its actors as “family,” a truth evident to anyone who has heard a recap of network shows in which a fan refers to the characters by first name, as if they were relatives or friends. 

[snip] 

Bradbury imagined a democratic society whose diverse population turns against books: Whites reject Uncle Tom’s Cabin and blacks disapprove of Little Black Sambo. He imagined not just political correctness, but a society so diverse that all groups were “minorities.” He wrote that at first they condensed the books, stripping out more and more offending passages until ultimately all that remained were footnotes, which hardly anyone read. Only after people stopped reading did the state employ firemen to burn books.

AMUSING UPDATE: Someone should put Bradbury in touch with his publisher. I see that the book is still being billed as "The classic bestseller about censorship" on Amazon. OTOH, why fix something if it ain't broke?

At least our benevolent Google overlords care

about their water footprint.

Like thermal-based power plants, data centers are thirsty bastards when it comes to cooling water. The above video comes via Forbes, who also inform us:

Google did not reveal exactly how much water the Douglas County data center consumes but in an e-mail company spokeswoman Kate Hurowitz said, “It varies from day to day, but a typical data center of this size can use hundreds of thousands of gallons a day.” 

I can barely say Chattahoochee River, let alone spell it, but they look like good, salt o' the earth folk to me. I'm happy if they're happy.

Peter Frost, executive director of the Douglasville-Douglas County Water and Sewer Authority, said Google is saving taxpayer money as the local government now does not have to treat as much wastewater. 

“That saves capacity for future homeowners as well as businesses,” he said in the video. [Thanks Pete, we saw the video! - Ed.]

Libertarianism and the paleo diet - Natural or strange bedfellows?

I want follow up on the previous post by making a side observation on the paleo diet's marked popularity within libertarian circles -- especially anarcho-capitalists. Certainly, prominent libertarians like Lew Rockwell, Tom Woods and even Russ Roberts have gone "primal" in a very public sense.

Now, sure, this makes sense at the superficial level: It probably comes very naturally to many libertarians that they reject government-endorsed advice, take pride in swimming against the tide of mainstream thought, and so forth. Indeed, here is an article from LRC that openly flaunts the "ideological parallels" that underpin the libertarian-paleo connection. (Thanks Google!)

However, doing something simply because it feels "familiar" is likely to produce counterproductive results sooner rather than later. This is particularly likely to be true when it comes to endorsing heterodox thinking across unrelated topics.[*] After all, there's a reason why certain ideas tend to emerge as dominant over time: They explain the world around us better than the competing paradigms. (Obviously, this can change as we gain more knowledge. Science is a process after all and not an end result.)

More fundamentally, it seems to me that the underlying scientific approach of the paleo movement -- as outlined by Gary Taubes at least -- is at odds with much of what characterizes libertarian economic thought of the Mises.org variety. I've had my say about the dangers of extreme a priorism before and still consider the rejection of empirical testing by some Austrians to be a completely nonsensical dead end. Indeed, the a prioristic approach is antithetical to the empirically-based scientific approach that Taubes so strongly advocates.

Given his popularity among these groups, I wonder what Taubes makes of this?

[*] Rockwell, in particular, seems prone to indulging just about every crank,conspiratorial, anti-science theory around. (They're all there, by the way. HIV/AIDS, evolution versus creationism, vaccines and autism, climate change... Even David Icke, alien technology and unlimited energy!)

===

Speaking of libertarian-based economic research, a good example of why experimental design is so important can be found by looking at Selgin, Lastrape and White's (2010) much-circulated paper, Has the Fed has been a failure?. The study itself is a great piece of historical writing that makes an important contribution to the literature. It also uses some fairly advanced empirical techniques such as GARCH time-series modelling. However, SLW don't provide a compelling counterfactual and, as such, their work can at best be described as a "pre-post" evaluation. Despite some overzealous reviews in libertarian circles then, this study was never meant to provide a definitive answer to the question that it asked. To their credit, SLW actually emphasize right at the outset (p. 1):

These findings do not prove that any particular alternative to the Fed would in fact have delivered superior outcomes: to reach such a conclusion would require a counterfactual exercise too ambitious to fall within the scope of what is intended as a preliminary survey. The findings do, however, suggest that the need for a systematic exploration of alternatives to the established monetary system, involving the necessary counterfactual exercises, is no less pressing today than it was a century ago. 

UPDATE: Dan Kuehn weighs in with some thoughts here.  He's not completely convinced that SLW heed their own warning...

The language of science: Paleo edition

I've developed an armchair interest in the so-called "paleo" diet. Among other things, my curiosity was piqued when Tim Noakes -- one of South Africa's most respected international experts in his chosen field of sports science -- came out with a series of very public endorsements... In the process, disavowing views that he had held and promoted for the bulk of his professional career.

"Hey, if it worked for Raquel Welch..."

What really makes me think that this paleo thing is at least worth considering, however, is the language that prominent paleos use when talking about the science underlying nutritional advice. A good example of this can be found in a column by Gary Taubes that was written in response to a much-publicized study by Willett et al. (2012), which purports to show that "eating red meat is associated with a sharply increased risk of death from cancer and heart disease". (HT: A bunch of people.) Taubes is a science writer and, near as I can tell, the intellectual popularizer of the paleo movement. Here he makes some great comments about what characterizes good scientific research:

Science is ultimately about establishing cause and effect. It’s not about guessing. You come up with a hypothesis — force x causes observation y — and then you do your best to prove that it’s wrong. If you can’t, you tentatively accept the possibility that your hypothesis was right. [...]Here’s Karl Popper saying the same thing: “The method of science is the method of bold conjectures and ingenious and severe attempts to refute them.” The bold conjectures, the hypotheses, making the observations that lead to your conjectures… that’s the easy part. The critical or rectifying episode, which is to say, the ingenious and severe attempts to refute your conjectures, is the hard part. Anyone can make a bold conjecture. (Here’s one: space aliens cause heart disease.) Making the observations and crafting them into a hypothesis is easy. Testing them ingeniously and severely to see if they’re right is the rest of the job — say 99 percent of the job of doing science, of being a scientist. 

This should all be drawing nods of approval from anyone trained in the scientific method... say, an economist interested in applied research (pick me!). Gathering a lot of data and observing correlations is only the start. What we really have to do is isolate causal effects and, crucially, establish a reasonable counterfactual. Taubes goes on to critique the Willett et al. study by describing how "associative" relationships are only good for generating hypotheses (i.e. about the causality of those relationships), which must then be tested using experimental settings. Willett and co. apparently don't concern themselves with this vital last step; hence the criticism.

In his article, Taubes concentrates on randomized controlled trials (RCTs), which are the design setting of choice for conducting medical experiments. Unfortunately, carrying out a meaningful experiment in an economic setting can be even more complicated. All too often, we simply aren't able to control for all the relevant factors, or simulate activity within an economy as and when we would want. That means that RCTs are pretty much off the table from the get-go.

Nevertheless, the good news is that empirical researchers have developed some powerful alternatives in the absence of the "laboratory" ideal. We use natural experiments, instrumental variables, difference-in-differences, and other study designs to simulate the laboratory setting and randomize treatment effects. Using these approaches helps us to be reasonably confident in answering many important economic and policy questions.[*] Say, does a minimum wage increase unemployment? (Much to my own surprise, the answer appears to be not really.) Or, how does crime respond to an increased police presence? (Well, according to this excellent study, a 10 percent increase in the police activity of London boroughs brought about a 3 percent drop in crime rates.)  If you click on the above links, you'll find an in-depth discussion of the particular circumstances and methodologies that allowed the researchers to treat their studies as experimental settings. These are just two examples, but they provide valuable insight into how good empirical economics is conducted in practice.

Of course, it should also be noted that economists and other social scientists are increasingly reliant on approaches that mimic the laboratory settings of natural scientists. Two of the most obvious candidates being experimental economics and field experiments. However, my main point in the above paragraph is about how we can still establish causation in the absence of such idealised, controlled settings.

Going back to the paleo diet, I'm still fairly agnostic about the whole thing despite my curiosity.[**]  I certainly don't know enough at this stage to confidently say whether Gary Taubes and co. are fundamentally correct in their views about nutrition. For all I know, the evidence may not be nearly as compelling as they make out. They may even be misrepresenting the views and research efforts of mainstream nutritional experts. However, I do know that Taubes talks about science in a way that makes sense to me. At the very least, that makes me think that he is someone worth listening to.
____
[*] Yes, it is true that definitive answers to some major economic questions remain more elusive. Ideology plays a big role as well, but the lack of an experimental setting partly explains why economists disagree on, say, how effective a stimulus package will be in reducing unemployment. 
[**] As my cunning nom de plume will testify to, dietary concerns are not high on my list of priorities. I don't feel particularly compelled to change my eating habits as of yet.