Logan City Energy Policy

Tonight the City Council will consider a net metering program proposed by the Renewable Energy Advisory Board lead by Dr. Robert Davies and others. In simple terms, the program would allow residents to install solar panels on their homes to sell energy back to the city during times of peak energy demand.

The proposal is one of a growing trend in Logan City toward green policies. In the past year we have seen the institution of mandatory recycling, rejection of IPP3, the creation of the Renewable Energy Advisory Board among other measures.

The intent of these policies is to promote a responsible stewardship of the earths resources. The hope is that measures taken locally will resonate and effectuate globally. While idealistic and noble, the reality is starkly different.

There is a phenomenon in political economy known famously as the “tragedy of the commons”. Wikipedia’s article on the tragedy of the commons explains the phenomenon:

From this point, Hardin switches to non-technical or resource management solutions to population and resource problems. As a means of illustrating these, he introduces a hypothetical example of a pasture shared by local herders. The herders are assumed to wish to maximize their yield, and so will increase their herd size whenever possible. The utility of each additional animal has both a positive and negative component:

• Positive : the herder receives all of the proceeds from each additional animal
• Negative : the pasture is slightly degraded by each additional animal

Crucially, the division of these components is unequal: the individual herder gains all of the advantage, but the disadvantage is shared between all herders using the pasture. Consequently, for an individual herder weighing up these utilities, the rational course of action is to add an extra animal. And another, and another. However, since all herders reach the same conclusion, overgrazing and degradation of the pasture is its long-term fate. Nonetheless, the rational response for an individual remains the same at every stage, since the gain is always greater to each herder than the individual share of the distributed cost is. The overgrazing cost here is an example of an externality.

Because this sequence of events follows predictably from the behaviour of the individuals concerned, Hardin describes it as a tragedy: “the remorseless working of things” (in the sense described by the philosopher Alfred Whitehead). As such, it illustrates how “invisible hand” (laissez-faire) approaches to resource problems need not always provide the expected optimal solution. In Hardin’s hypothetical commons, the actions of self-interested individuals do not promote the public good.

Earths climate is perhaps the largest commons in the world. It recognizes no political boundaries or distinction of government. Greenhouse gases from China have the same effect as atomically identical greenhouse gases from Logan, Utah’s Main Street.

In the analogy of the pasture, a farmer could become morally outraged over the degredatioon of the commons. He could decide to set an example by abstaining from the commons altogether and might invite others to do the same. Even if he convinced half of all farmers to abstain, the eventual fate of the commons would be the same- it would only be delayed. And in the interim, those abstaining would bear all the cost of extending the life of the commons but gain no benefit. The tragedy of the commons is not that the farmers are greedy, but that the resource is managed poorly. It lacks clearly defined property rights.

So it is with Logan City and environmental policy. There is an environmental crisis. Global warming is real. The problem is that environmentalists are asked the city to foolishly withdraw from the commons (IPP3 for example) in hopes of setting a local example that will effectuate globally. IPP3 will still be built and still spew greenhouse gases whether or not the City of Logan paricipated. And even if IPP3 is not built, the coal that would have burned in IPP3 will be burned somewhere. Logan City not only fails to create environmental gains for itself, but fails to create environmental gains for anyone anywhere.

The hope that the City of Logan will set a grassroots example is absurd. Aside from the fact that it represents just 40,000 of 300 million Americans and nearly 7 billion on earth, the argument assumes that human nature can be changed by moral pleas and calls. The problem faced in the pasture example was not a result of farmer greed, excess or morality. It is a problem of undefined property rights. The assumption of both the morally outraged abstaining farmer the City’s environmental policies is that the problem is a moral one. It is not a moral one. Global warming is a problem of a mismanaged commons (our atmosphere). Human nature will always behave rationally seeking to maximize individual gains and minimize individual costs. Those seeking to change that nature throughout history whether it be through socialist living experiments or grass roots global warming policies ultimately fail and find themelves spitting into the wind. Rational self interest isn’t a bad thing. It’s a wonderful power that when harnassed correctly yields powerful results.
Logan City’s global warming policies are expensive to its citizens, accrue no benefit to its citizens or anyone on the face of the earth and effectuate no change in how the commons of the atmosphere is managed internationally. In short, they are feel good measures with absolutely no solvency.
Because the commons of the atmosophere is so incredibly large- much larger than Logan City- the only policy solution that will actually work will be one of an international scale. It will require a treaty that nearly every nation signs that manages and defines rights to pollute by nation. Nations could sell those rights to one another in a free market system. The agreement would need to be comprehensive and enforceable. An attempt of such an agreement was made with the Kyoto Protocol, but the U.S. refused to sign the agreement (for good reasons).

I admire those that want to address the problem of global warming. Their hearts are in the right place. This problem, however, can only be solved on an international scale.

Quick Benefit Cost Analysis

Some of you expressed interest in an Excel Benefit Cost Analysis (BCA) calculator I have. This program will discount future costs and benefits and give you the net present value (NPV) and Benefit Cost Ratio (BCR). This follows Mungers chapters on Discounting.

If you want of copy of this calculator to do you policy analysis paper, email me and I will send it to you. derekjohnson@cc.usu.edu

A few rules of thumb: in general for a program to break even its BCR needs to = 1 and for it to make money it needs to be > 1. The NPV must be positive to make money. The greater the NPV the more money you make or save.

The tricky part is deciding on an interest rate - Munger covers this in his chapters. But if you stick around 5-7% you should come up with a fairly conservative estimate. Also, leave the inflation box empty.

This tool is to help you evaluate the feasibility of programs not calculate your mortgage.

Also, if anyone is interested in the equations behind this calculator I can email them.

This calculator was created by Nicole McCoy PhD.

Artificial Snow

Could it be a possible approach to solving global warming?

This news reminds me of artificial rain or snow. Growing up in China, I have heard many times, in Shenzhen, and in Beijing, that the rain or snow was artificially made by the meteorological station for some special purposes, such as cooling the air in hot summer, or when there is some special occasion going on. I have no ideas how they did that, nor do I know what the advantages or disadvantages it brings. Environmental modification, could anything be possible to go wrong with it?

Electric Car

In further giving away how scholarly my reading/viewing habits are, I will disclose that I can sometimes be found watching the Martha show (these days, mostly to enjoy how ignorant Martha looks when she bosses everyone around). Today Martha had a segment on about "green" cars. Apparently this whole week features something "green," in honor of Earth Day. (I don't think the clip can be found on her website, but the link is to the show).

Anyway, she had this lady on from GM talking about how hybrid cars and electric cars are the answer. We've already discussed hybrid cars, and Reason Magazine's thoughts on them. Martha and this woman were really gung-ho about electric cars though, frequently touting how there are zero emissions from these cars, and all you have to do is plug it in at night. They were really put forward as the answer to making yourself feel good about your American driving habits.

I sat there amazed that they made it sound so appealing, with no thought or mention of how electricity is supplied. Where are the zero emissions from a coal-burning plant? "And all you have to do is plug it into your wall. You don't use a drop of gasoline!" I don't think so! I'm also pretty sure Martha's fleet of Suburbans and Lincolns often shown on the show aren't very "green."


Americans are buying into this crap because they don't understand how it all works, and celebrities' "holier than thou" lectures on being green fuels it further.

Market for Numbers

I was just reading good ol' Sports Illustrated, and they have a little segment telling why different players choose the numbers they do. The article can be found online here.

I never knew that numbers had been assigned a monetary value (discussion of this in the Odom and Shaq segments), and that there is a market for buying certain numbers. I found it interesting.

Dilbert on Zero Sum Thinking

From David Tufte at voluntaryXchange:

As an economics professor, it's pretty hard to get across to people that the modern world isn't a zero sum game.

The April 10th Dilbert sums this up beautifully.

For those not in the know, a zero sum game is one in which the winner gains what the loser loses.

More broadly, the widespread viewpoint that life is a zero sum game is a motivation for envy, and a common justification for the belief that exploitation of the weak is a lot more common than it is.

It's important to limit this worldview, because all around us society is filled with positive sum games (where everyone wins): shopping, having kids, stopping at stop signs, being punctual, sex, blogging, speaking the same language as your neighbor, and so on.

Icelandic Fishing Policy Analysis

I am at a conference in Brazil where I met Hannes Gissurarson, the creator of the Icelandic ITQ (Individual Transferable Quota) system. It is one of the world's most successful. Here is a 2000 paper he wrote on the topic. He says that none of the conclusions of the paper would change if he wrote it today. Download the whole paper--it is worth reading.

Global Warming: a Security Threat?

After reading an article about how global warming could cause a security threat to the U.S., I had to wonder the threat it could actually pose. The article stated, “Unlike the problems that we are used to dealing with, these will come upon us extremely slowly, but come they will, and they will be grinding and inexorable”. This statement just made me think about stasis, and how Virginia Postrel said the government resists change and progress. Global warming could be a security threat to the United States if nothing was done about it, but it is a self proclaimed “slow process” by officials, couldn’t it be possible that in the years to come, technology and innovation could prevent some of the disasters anticipated? I believe there needs to be concern regarding global warming, but obviously it is a hot button topic, and I don’t see people just sitting waiting for disaster to come. Instead, I’m sure that some sort of innovation will be introduced to help prevent any real security threat to the U.S.

www.nytimes.com/2007/04/15/us/15warm.html?_r=1&oref=slogin

Lake Powell

Over the years, many individuals have been petitioning for the reclamation of Glen Canyon from the hands of the jet set house boat owners.

I visited the area to kayak last week and was informed of the lakes' retreating water levels. If current precipitation and water runoff continues to decrease as it has over the last 5 years, it appears that nature will reclaim Glen Canyon all on its own.

Property Right in Zoning Plan

Look at the Nail House story in NYTimes front page days ago, which has attracted much attention recently from western media and aroused heated discussion among Chinese people.

Dingzihu is a Chinese phrase that means a household or person who refuses to vacate their home to make way for real estate development, for "they stick out like nails, hard to be removed in an otherwise modernized environment". It has been translated as 'nail house' in English.

Should people move if the compensation is reasonable despite of their unwillingness in municipal or commercial zoning plan?

During the CCTV interview, the “nail house ” owner WU said (translated): Among the residents moving, I am the largest private property owner, furthermore you can basically say I am the only one who has complete papers, such as a property rights land right certificates, they both clearly indicated that it is a building zoned for business. At that time I had just finished renovations, and they (the developer) said they had to tear everything down and people had to be relocated, as a result this was really damaging for us. According to my property right certificate, I am clearly in ownership of 219 square meters, so for this use it should be returned to me.

According to Chongqing law, there are three possible ways to compensate owners in this type of situation: 1) provide housing on the same spot; 2) provide housing in another spot; 3) provide a sum of money. The city is only willing to provide Ms. Wu, the resident, with the third option, but she is not willing to accept a sum of money.

According to a survey by QQ.com (famous Chinese software media that rivals MSN, link not provided here for in Chinese), 81.46% of the netizens back up the house owner to protect his property, while 10.84% deem the issue as too complicated to come up with an idea, and 7.10% consider the house owner as "stubborn nails".

Settlement of the case: according to the Chongqing Court, the two-storey building was valuated at 2.47 million RMB while the real estate developer offered a replacement shop/home building valuated at 3.06m RMB; as a result, the house owners Yang/Wu will pay back the difference of 590,000 RMB to the developer. Furthermore, the real estate develop will pay compensation to the amount of 900,000 RMB for business losses plus 105,000 RMB for property damage and moving expenses. This is somewhat coming down from the 5 million plus RMB originally demanded by Yang/Wu. (From Hong Kong newspaper: Ta Kung Pao)

Report from other media:
http://www.time.com/time/world/article/0,8599,1606215,00.html
http://www.reuters.com/news/video/videoStory?videoId=47459

Interesting Links

I came across some interesting and fun links that I thought some of you might enjoy.

Tragedy of the Bunnies. This is a game that helps teach the concepts in Hardin's Tragedy of the Commons.

The Road to Serfdom. In circa 1950, GM published a comic book version of Hayek's The Road to Serfdom. The illustrations are my favorite part, particularly number 4.

Hilary’s Universal Health Care:

Do you buy it?

"We're going to have universal health care when I'm president — there's no doubt about that. We're going to get it done".

Hilary’s “universal health care” seems to attract much attention lately. Too bad that it includes no more details of the plan yet:

"The reason she hasn't 'set out a plan and said here's exactly what I will do,' Clinton said, is that she wants to hear from voters what kind of plan they would favor. "

We already discuss in class that Medicare/Medicaid are kind of most expensive part of U.S. Budget, and how to pay for this Universal Health Care?

"'We're going to change the way we finance the system by taking away money from people who are doing well now,' she said. Asked who that was, she mentioned insurance companies. "
"We're going to take things away from you on behalf of the common good. "

Obviously quite a lot of American people regard it unacceptable because of violation of liberty and freedom or a socialist act. I am surprised. I think it is wasting time to discuss the institution and freedom thing when to open up such a policy. If we want to do something really good for the society, why not just focus on how many people are going to benefit from it and how good it does to the society. A policy failure might not necessarily be the failure of the policy itself but one because of biased obstructions.

Quotes from:

http://www.hillaryforpresident-2008.com/
http://news.yahoo.com/s/ap/20070326/ap_on_el_pr/clinton_health_care;_ylt=Ak6Vm1wjV2NAKcU8CSeDW8nMWM0F
http://news.yahoo.com/s/ap/20070324/ap_on_el_pr/democrats2008

Hug a Hummer

This study came up yesterday in class. If you are interested in reading about it click here.

This commentary of a study done on the energy efficiency of hybrids comes from the Reason Foundation. www.reason.org

Politics Meddling with Markets

I just read an article that describes how officials in San Francisco recently voted to ban plastic shopping bags.

It is another classic case of elected officials working to impose what they think is best on their constituents. Would an incentive to return shopping bags or use cloth bags have been better? Or does SF really need to wage a "war" on plastic bags?

Logan City and Power Decisions

It is interesting to consider the reasons behind the recent decision by Logan City Council to not buy into IPP3 power plant in Delta Utah. More than anything this policy decision seems to be driven by a relatively small group of very vocal citizens who were able to dominate the agenda and who rather than providing actual facts hopped on the recent Global Warming band wagon. The power from IPP3 is going to be produced and used, we've found the power from earlier phases of the project to be both reliable and cheap.

The alternatives presented are expensive and not fully developed yet, the geothermal proposal is still just that a proposal and there seems to be some hope that it will be viable but that is far off in the future.

It appears that policy is being made on emotion in this case and not on objective facts.

This letter is from Logan City Power and Light.

To: Logan City Light and Power CustomersFrom: Jay Larsen, Light and Power DirectorDate: March 23, 2007Re: Council Decision to Reject IPP 3
In the Council Meeting on March 20, 2007 the Logan City Council voted 3-2 to reject our participation in the future IPP Unit 3 Project. The Council Chambers was filled with advocates of the Sierra Club and other environmental groups. There were very few attendees that spoke in support of the project.
When the motion to reject IPP 3 came up, Council Woman Tami Pyfer, suggested a 10 MW participation level as a compromise position. Steve Thompson supported that idea but they were out-voted by the other 3 Council Members. Steven Taylor, Joseph Needham and Laraine Swenson all voted to reject IPP 3 in favor of yet to be proven options.Logan has been studying this power supply option for several years. Logan and the other participants have invested several million dollars and several years performing air quality studies, and complicated contract negotiations with the owners of The Intermountain Power Project Units 1 & 2 (IPP 1&2). It is anticipated to take 5-6 years to complete the construction and bring the unit on line.
The Intermountain Power Agency (IPA) received its approval order from The Utah Division of Air Quality (UDAQ) in October 2004 to proceed with the construction of the project. This project meets the EPA and Utah Division of Air Quality (UDAQ) rules. The Sierra Club and Western Resource Advocates appealed the decision of UDAQ to issue the Approval Order soon after it was issued. We must now go back and reiterate the issues brought to the UDAQ by the environmentalists. We do not expect the UDAQ decision to change. We have substantial data generated by reputable engineers. It will add additional cost and time to reiterate our position.
The IPP Unit 3 Project was originally designed to be a sub-critical boiler design with Selective Catalytic Reduction and Ultra Low NOx burners. This design was changed during the study phase to include a super-critical boiler design that is even more efficient and will produce fewer emissions than the original design. This project will be one of the cleanest coal plants ever built.
We have a contract to purchase 10 MW of power from the Bonanza Power Plant near Vernal, Utah that expires in 2015. 10 MW of IPP 3 would only replace that power and still leave us with room for other options, if they become available. Reducing our participation is a compromise position.
Logan’s current portfolio contains hydroelectric, wind, natural gas, firm contracts and coal power. It was the hydroelectric and coal power that sustained the recent power crisis without sharp price increases. All of the other power supply options were affected radically by insane market conditions.
I believe the recent political movement to reduce greenhouse gasses and switch to “green-power”, that was very effectively conveyed by the Sierra Club advocates, was a major influence on the recent Council decision. While I believe we need to move in that direction, I do not believe it is wise to totally abandon a proven, reliable option at this time.
The latest cost estimates I have of alternative power supply options are all higher than the proposed Unit 3 project. Wind power is currently priced at about $65 / MWH. Solar power costs in excess of $100 / MWH. Geothermal power could be produced for as little as $75 / MWH, with pressure from political market conditions driving prices higher. Our latest proforma of the IPP 3 costs are $49 / MWH in 2013, when the plant could be on line.If we purchased 10 MW of Geothermal at $75 / MWH instead of IPP 3 at $49 / MWH it would increase our overall power supply costs by about $1.5 million or 6.2% of our annual power supply costs. If we purchased 20 MW of Geothermal it would increase our overall costs by about $3.5 million or 14%. I think this is too high a price to pay for a small utility.
During the 2000-2001 California Power Crisis we lost our system reserves. We had about $10 million in reserve and ended up $3.5 million in the red. We had total losses of about $13.5 million due to extreme market conditions. Firm power supply is a hedge against these types of problems.
Logan is also in the process of upgrading our local transmission system. We need to upgrade our existing 46 kV transmission system to a 138 kV system to meet our growing demand. Our current plans are to bond for the first phase of the conversion at a cost of about $6,000,000. This first phase would build the first phase of new 138 kV power lines and convert the first two substations to 138 kV. This would get us past a critical phase and we could then convert the other fours substations over time without additional bonding, if we have the funds available. Without this upgrade our system cannot meet our growing demand. If we spend all of our available funds pursuing green power we may need to bond for as much as $12,000,000 or more to complete the upgrade. This will add additional debt load that may not have been necessary.
Our current upgrade plan would allow us to continue to provide reliable system capacity while incurring affordable debt. The annual cost of opting for 10 MW of Geothermal versus IPP 3 is about the cost to convert one substation to 138 kV. I think it makes a lot more sense to move into renewable power options in smaller affordable increments.
We are a member of the Utah Association of Municipal Power Systems (UAMPS). UAMPS has 49 other public utility members in the region. UAMPS is buying 450 MW of the 900 MW IPP 3 project. Members sign up for the amount that meets their individual needs without taking on the entire risk. This provides economy of scale while allowing members to meet their individual needs. We are currently buying 2 MW of wind power with this type of arrangement. Early discussion with UAMPS about the proposed geothermal option indicates that UAMPS could take up to all of the output of the proposed geothermal project, depending on the other members desire and the viability of the project as it emerges. This approach reduces our risk of a yet to be determined project.
In my opinion 10 MW of IPP 3 balances the environmental issues with long term price stability, while 0 MW of IPP 3 leaves us too vulnerable to future market pricing conditions. With no additional base load power our current forecast shows that we will begin to have a shortfall of base load power supply beginning in about 2018 to 2019. This base load deficit will increase with time.
Although the council voted down our participation in IPP3 at last week’s meeting, we could still participate if that decision is changed. If you feel strongly about this issue, I urge you to contact council members Laraine Swenson, Joe Needham and Steven Taylor and ask them to place this resolution back on the council agenda at one of the two April meetings, and urge them to support the compromise position of a 10 MW participation level. Please let them know how increased power costs will impact your businesses. I don’t believe the council members received any input from our large power customers before this vote, and so perhaps your contact can make a difference.

Wind Power and Water Power:

So Happy Partner Together

Wind power is known of many fine attributes as a power source, but steady predictability is not one of them. Water power, on the other hand, is often highly controllable. Proponents of wind in the Northwest say it is a match made in heaven, and here is the article.

Lowering Physicians Wages to Reduce Healthcare Costs

Now that we all understand something about healthcare policy (thanks Bobby), albeit superficial, I thought some of you might be interested in this post from Marginal Revolution. Click Here

At the end of his post Cowen states that first step in reducing healthcare costs in the U.S. is to reduce doctor’s salaries, by allowing a greater number of qualified foreign doctors practice in the U.S.

If wages are lowered won’t better qualified potential med-school candidates go someplace else, leaving us with less qualified doctors? What do you think?

P.S. the rest of the post on the French healthcare system is interesting as well.

Technology

F. Hayek in The Constitution of Liberty, talked about the importance of knowledge and freedom, by which he means the absence of coercion, to progression. He would favor what Postrel called a “dynamists” intellectual point of view which advocates the limiting of “universal rule making to broadly applicable and rarely changed principles, within which people can create and test countless combinations”. It is freedom, the use of knowledge and the general absence of structure that allows for capitalism to progress and expand.

But Hayek wrote his book during the 60s when technology was not as fast-paced as it is today. In class a few weeks ago, it was mentioned that we are having a hard time keeping up with technology. So I wonder if Hayek would still think a dynamists point of view regarding progression and capitalist expansion is a good idea. Or maybe he would at least favor a more constrained dynamist or even a stasis intellectual point of view. As Postrel explains, “. . . modern society changes very rapidly owing to technological change. Thus there is no stable framework. . . . The technophiles are taking us all on an utterly reckless ride into the unknown”.

How much progression do we need or how long will it take us to decide whether we are comfortable enough with regards to our standard of living? Where are we going with all this technological progression? Have there been any policies advocated with regards to slowing society down?

http://isi.org/lectures/text/pdf/lawler8-6-04.pdf
http://geocities.com/Athens/Olympus/5599/philosophy/technology.html

Private Schools Refuse Vouchers

The Utah State Legislature expanded its school voucher program this past legislative session. Now there are private schools in Utah that are refusing to accept state vouchers. They're worried that if they accept state funding in the form of vouchers they will fall under state regulation over time.

Tyler Cowen of the blog, Marginal Revolution includes the above stated concern in his posting “My worry about vouchers.”

Cowen has some interesting concerns that are not often expressed or popularized about voucher programs. It is worth taking a look at.

Smart Boys, Bad Grades

I found a very interesting article in today's desert news.
The article covers the gender gap between girls academic performace and boys. Female students in High School hvae 37% higher GPAs than their male counter-part. The article brings a different perspective to this issue than the traditional wisdom. The traditional wisdom is that boys are lazier and do not complete their assignments. This article argues that elementary, junior high and high school teachers are generally female and they women teachers have the tendancy to inadverntently teach in methods that are more conducive to female learning attributes. The article talks about how males and females learn in different ways and boys needs are being met. Male test scores and female test score still remain virtually the same. The problem is that students are graded by behavior that has nothing to do woth what they are learning. The article argues that boys understand the concepts so they don't want to do "busy work". Opponents argue that boys will not learn accountability. However when placed in jobs, males generally still complete assignments and arrive at to work on time. Males do not see the incentive at school.

The article has a link to an interesting study that covers in far more details the needs of boys in educational setting. I went to the website and read most of the material and found that it made sense to me.

Here is the link.

http://deseretnews.com/dn/view/0,1249,660204566,00.html

More questions about world poverty

Previously I have addressed the problem of world poverty. For another class we are reading the Constitution of Liberty, by Friedrich Hayek, and I thought his point of view about poverty was very interesting. First of all, Hayek addresses progress and the notions of inequality. In essence, he claims that progress demands inequality, and as the upper class moves up, so does the lower class. In other words, the lower class benefits from the upper class’s advancement. As I read this, it seemed true that although there are large divisions between the West and other poorer countries, as the West advances, those poor nations do as well.
Therefore, like we talked about in class, Hayek would agree that poverty is an endless, necessary cycle. I had never really looked at addressing poverty like that before, and realized that it does make a lot of sense. Although there are many underlying issues that people would raise regarding the wealthy, such as the wealthy are not necessarily the innovators, they just finance the innovations, it is obvious that the problem of poverty does not come with an overt answer.
Another important aspect Hayek looks at is the utilization of knowledge, and that wealthy countries are wealthy because of their use of knowledge. Therefore, could the division between wealthier and poorer countries be lessened through more education? If wealthy nations funded more educational programs and helped generate more knowledgeable institutions, could poorer nations close the divide somewhat?

The Global Inferno is Everywhere

I read in a recent issue of SKI that banks in Europe and the U.S. will not give loans to ski areas that are below 5000 feet. This recent financing restriction is a direct result of global warming. Its mind blowing that the fears of global warming are percolating into all aspects of society.
Ask Bob how global warming is changing the sex industry.

Bono loves Africa or Himself?

Once again from Tyler Cowen:

Advertising Age calculates that around $100 million has been spent blanketing billboards and magazines with images of Bono and other "celebrities", while the total sum raised for Africa is $18 million.

Just to be clear... Total spent on making Bono more famous = $100 million.

Total spent on drugs for Africans = $18 million.

Here is the link,

I had a professor in graduate school who often talked about cloaking private interest in public interest. Is this a case of Bono and others cloaking their personal advertising in a cloak of concern for Africa? I prefer models that assume self interest is the prime mover over models that assume people are stupid. If we reject the self interest model in this case are we really just left with stupid, stupid, stupid?

Policy re Africa?

At www.marginalrevolution.com Tyler Cowen posted the following:

Africa

Tyler Cowen

A loyal MR reader asks:

Africa. What are your long term predictions? Which policies should rich countries adopt? Which will they adopt? What can I do?

My long-term prediction is that Africa will stay quite poor. Rich countries should offer Africa complete free trade, but the benefits of this move are overrated. Low productivity, and transport costs and corruption within Africa remain the central problems, not foreign tariffs.

Libertarians are too quick to say that foreign aid is counterproductive. Most African governments would be corrupt anyway, and there is usually some positive trickle-down from the aid. The wastage is massive, and I can understand the desire to stop sending government-to-government aid, but there is a real moral dilemma.

I also think most of Africa is in a Malthusian trap. That is perhaps the better critique of aid, but alas also of trade as well. But even within this trap, wealthy foreigners can help make the transition from one steady state to another less painful. And the trap need not hold in every local corridor. Plus we are offering a lottery ticket (with what p?) out of the trap. Malthus doesn't mean we should turn our backs on suffering.

The intellectual property issues, when it comes to copying drugs, involve an irreconciliable clash between rule and act utilitarianism.

Africa is a much bigger moral dilemma than most people are willing to admit. And that moral dilemma appeared pretty big in the first place.

I see some chance that parts of Africa, such as Ghana and Senegal, will escape the Malthusian trap within twenty to thirty years. That's the most positive prediction I am willing to make.

You can do some good if you are willing to directly administer medical treatments to Africans, in Africa.

Here is an interesting bit:

“Thinking about problems analytically can easily suppress sympathy for smaller-scale disasters without, our research suggests, producing much of an increase in caring for larger-scale disasters”, the researchers said. "Insight, in this situation, seems to breed callousness".

Power Grid

I've been thinking about the idea we discussed in class that the natural monopoly does not lie in providing power, but in the grid (infrastructure) system.

I really like the idea of allowing people to purchase power from wherever they want, and that power would be put into the gird, and the consumer won't necessarily be using the power they purchased, but they would be using the amount of power that was put in.

I think this could create great incentives for people to understand where their power comes from. It would also allow the consumers choices in how environmentally friendly their power is. They could have the opportunity to pay more for their power, if they wanted to use more expensive, green or sustainable power sources. Giving the consumer choices is a good thing. (Although most would care most about the cost of their power above anything else, but this would allow those celebrities talking about the Green Oscars pay to have their consciences cleared, while using green power in their over-sized multipe houses).