Monthly Archives: October 2014

Climate of Fear III

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People tend to fixate on oil as a key natural resource. How much oil is there in the world? Have we passed “peak oil” or is there a lot still to be discovered? (See: “The Blood of Victory.”) They should also give some thought to water. Water was a key natural resource long before oil and it will be a key resource long after oil has ceased to be the chief fuel source. We need it for drinking and for crop irrigation at a minimum.

Of all the water on the earth, 97.5 percent is salt water. Unless one goes through a very costly desalinization process ($2.50-$16/gallon, compared to $0.50-$2.00.gallon for conventional fresh water), this water is not available for use. This leaves 2.5 percent of the world’s water as usable fresh water.

This sounds scary. In theory, there is about 1.5 billion gallons for each person currently living on earth. However, only a small portion of that water is readily available for human use.   The polar ice caps and the glaciers hold about 68 percent of this fresh water. Another 31 percent of it is not readily accessible because it is buried deep underground. Thus, 99 percent of the 2.5 percent is not available for human use (at this time).

Even so, there is a huge amount of fresh water on the earth. Readily available fresh water surface run-off averages 524,151 gallons per person. That sounds reassuring.

The 6.3 billion people now living on earth use about 54 percent of that readily available water. So, it looks like we have a comfortable margin. That is reassuring. It is estimated that world population will rise to 7.8 billion people by 2025 and that use of readily available water will increase to 70 percent of the total. That sounds scary.

 

That small amount is unevenly distributed, just like most other resources. The UN (God bless its pointy little head) has worked out a scale of measurement for water supply per capita.

“Water abundance”:    >19,000 cubic meters/person. Canada, Russia, the Congo basin, almost all of South America.

“Water surplus”:          3,400-18,999 cubic meters/person. United States, Mexico, France, Ireland, the Balkans, Turkey, Southeast Asia, Kazakhstan.

“Water sufficiency”:   1,700-3,399 cubic meters/person. Most of Europe, Iraq, northern Iran, Afghanistan, most of India, southern and western China, Japan.

“Water stress”:            1,000-1,699 cubic meters/person. Northern Pakistan, South Africa and Zimbabwe, Syria, Czech Republic, Poland.

“Water scarcity”:         < 1,000 cubic meters/person. North Africa, Middle East, Saudi Arabia, southern Iran, southern Pakistan, northern China, southern India.

See: Jen Joynt and Marshall Poe, “The World in Numbers: Waterworld,” Atlantic, July/August 2003, pp. 42-43.

It seems likely that water shortages will start to weigh on both domestic and international politics. The pressure will come from the bottom, from those countries already facing “water stress” and “water scarcity.” One issue will be a campaign for international sharing.   Here the experience of the American West is likely to be useful. Western states have been sharing water resources for decades. It hasn’t always been easy or painless. It’s better than starting from zero.

A second issue will be migration—first internal, then international–by “water refugees.” People will try to ignore this problem for as long as possible. They will describe it as a domestic problem in water-deficient countries. It will not stay contained, any more than climate change.

Climate of Fear II

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Recently, the New York Times has published pieces by economists arguing that the costs of limiting climate change may be much lower than people have feared.

The Cornell economist Robert Frank has made a series of arguments in favor of vigorous action in responding to climate change. Some of them are more persuasive than are others.

First, the same people who argue that climate change isn’t certain also go to the dentist once a year. Why? Because fillings are cheaper than root canals. The same reasoning goes for the uncertain effects of an uncertain degree of climate change.

Second, the same people who want to protect capitalism from excessive regulation ignore that the market works really well. Raise the costs of pollution to producers and consumers and they will find lower-cost alternatives. Carbon taxes and cap-and-trade policies can cut pollution without pushing up over-all prices.

Third, we restrict the right of individuals to exercise their “individual liberty” when it would harm others. Same thing goes for discharging greenhouse gases.

Some of his arguments seem to come from cloud-cuckoo-land.

First, capitalism is “creative destruction.” If carbon-based industries get destroyed by prices that reflect their real costs to the environment, then investors will plow money into alternatives. What Frank fails to understand is what Catherine the Great tried to explain to Denis Diderot: “You write your reforms on paper; I must write them in human flesh.” Coal miners don’t easily convert to barristas. Look at what happened to British coal miners after the Thatcher government decided to close many inefficient coal mines. Boozing away their dole in the local.

Similarly, there are only a relatively small number of convicted felons or people discharged from mental asylums who want to obtain a permit to carry a concealed weapon, but lots of people drive cars. It is easy to restrict the rights of the former, but it will be hard to restrict the rights of the latter.

Second, what you lose on the swings you make up on the merry-go-round. That is, high taxes on pollutants would generate huge revenues that would allow other taxes to fall. What Frank fails to notice is that American taxation is highly progressive. The top one percent on tax-payers provide over a third of all income tax revenue, while the bottom fifty percent pay less than five percent. Raising gas taxes, for example, would penalize the vast majority of Americans while off-setting tax cuts would benefit the “one percent.” Good luck getting that through Congress.

However, the proponents of the carbon tax increase + other taxes decrease frankly acknowledge that the two have to run together to keep the tax effect neutral. If the carbon tax is increased without an offsetting reduction in other taxes, then it really is a significant additional cost for the economy.

Third, American leadership would give us the moral high-ground, while the threat of tariffs could be used to lever the Chinese and the Indians into following our lead. I suppose we could ask Vladimir Putin what he thinks of America’s moral high ground—and of economic sanctions.

In short, there are some interesting ideas on offer. However, the political bugs haven’t yet been worked out of the system.

Robert Frank, “Shattering Myths to Help the Climate,” New York Times, 3 August 2014.

Eduardo Porter, “The Benefits of Easing Climate Change,” NYT, September 2014.

Climate of Fear I

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Climate change is an important, but testy, issue. It involves a number of distinct, but related, problems. The problems are more political than scientific or technological.

Burning carbon emits greenhouse gases into the atmosphere. Coal, oil, and gasoline powered the previous Industrial Revolutions. Most of the greenhouse gasses of the past came from what are now wealthy Western nations. Now, non-Western nations have embarked on a headlong pursuit of industrialization as a way of raising the living standards for their people. Developing countries now produce two-thirds of all greenhouse gases, and China is the single biggest emitter. China accounts for 28 percent of all emissions. This is more than the United States and the European Union put together. The greenhouses gases of the present and future are chiefly the product of these late-industrializers.

First, how do we cut future greenhouse gas emissions without telling non-Western countries that they can’t industrialize? One answer appears to be heavy investment in renewable energy sources like wind and solar energy. Yet China and India have as much access to solar and wind energy as do Western countries. What they don’t have are well-organized, articulate environmental lobbies. Taking a coldly economic view, the rulers lean toward carbon. They aren’t very interested in developing alternative energy when they have a lot of coal.

Second, who pays for the adjustments caused by the climate change that is already underway? Much attention focuses on countries suffering from “a case of bad latitude.” Climate change threatens “nations” on coral atolls in ways that don’t seem so threatening elsewhere. The Seychelles Islands in the Indian Ocean and the Marshall Islands in the Pacific Ocean are in danger of disappearing under rising seas. Bangladesh and the Caribbean Islands could face the same fate. (If we get lucky, so could Florida.)

The expectation in some areas is that the wealthy nations of the West will pay. “Don’t tell us you can’t cut emissions, you can’t give money, while you bask in the rich way of life you enjoy now. You know your emissions are damaging us. Help us out here.”—Ronald Jean Jumeau, the Seychelle Islands’ ambassador to the UN for Climate Change. He probably shouldn’t try that attitude on with the Chinese.

Third, people are afraid that the costs of stopping or—better yet—turning back climate change would cause a significant slow-down in economic growth. Alternative energy sources were estimated to cost more than our little friend, carbon, or to involve unacceptable risks (like Chernobyl). A heavy tax on carbon use offers the best means to shift consumption from carbon to non-carbon sources. Many enviro-friendly[1] people are willing to have someone pay it.

Who pays for the investment? Germany has tried taxing carbon to subsidize the development of wind and solar energy. First, they decided to exempt the export-oriented industries from the tax because these are often energy-intensive producers. Higher costs could reduce international competitiveness. German national prosperity through exports came before climate. Then the higher costs of carbon to subsidize alternative energy sources did not produce comparable supplies of wind and solar energy. Instead, energy prices went up. Now the German government has begun scaling-back the subsidies.

Justin Gillis and Coral Davenport, “Push for New Pact on Climate Change Is Plagued by Old Divide of Wealth,” NYT, 21 September 2014, p. 10.

[1] It’s too bad there isn’t some clever euphemism for this constituency in the way that “420 friendly” is a euphemism for dopers.

 

The economic mess

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Every–bored-to-tears–schoolboy knows who propounded the idea of a “social contract”: Thomas Hobbes and John Locke.  The idea of a social contract on the distribution of income has formed one of the pillars of “neo-capitalism” since 1945.  However, that basic idea has witnessed several successive versions.  From 1945 to the Reagan Administration in the 1980s, the US combined high tax rates on the wealthy with the channeling of the gains in productivity to employees.  Eventually, business people pushed back against what they saw an an unfair deal.  A new social contract emerged in which much higher incomes for the wealthy were accepted so long as the real incomes for the middle class continued to rise.  (All this is just my opinion.  In all likelihood, many of my historian friends would rain-down good-humored abuse on this interpretation.)  The financial crisis and the “Great Recession” then ruptured this second version of the social contract.

In 2007-2008 we had the financial crisis and the “Great Recession.”  In 2009 we started back up the road to prosperity.  American Gross Domestic Product (GDP, OK, cue Mort Sahl here) is up 6.7% over 2007.  Per-capita disposable income rose 4.2% between June 2009 and June 2014.  Well, some of us started back toward prosperity, but not all of us did.  In June 2009 the median family income was $55,589; in June 2014 it was $53,891 (in inflation-adjusted dollars).  That’s a 3.1% decline.

How can that be?  Well, the stock market is doing very well.  If you’re the kind of person who puts their  savings  into Vanguard accounts, then your the kind of person who probably has profited from the recovery.  (On the other hand, you’re also the kind of person who took a bath in the recession.  Not that the people at the New York Times give a rip about your experience.)  If you’re the kind of person who depends on wages or salary and your home is your chief investment, there is good reason to feel like the “recovery” is a joke.  (Like a bucket of water propped on top of a partly-open door.  “Hey, can you come in here for a minute?”)  Worse still, the 1999 peak in real household income was a little higher than the 2007 (pre-recession) peak in income.  Five years into the “recovery” and we aren’t even back to the 2007 level and the 2007 level wasn’t as high as the 1999 level.  In sum, we’ve actually had fifteen years of things not working right, rather than five or seven years of things not working right.  There’s probably something in the Bible about this.

One great challenge of the day is to figure out a new version of the social contract.  There has to be a way of achieving broadly-shared economic growth.  There isn’t much political consensus about what to do.  George W. Bush and Barack Obama, Republicans and Democrats all had or have high disapproval levels in public opinion polls.  A big chunk of voters seem to have swung from supporting Obama and the Democrats in 2008 to supporting the Tea Party faction of Republicans in 2010.  The 2014 mid-terms loom next month with no certain outcome.

Saying that there is no political consensus on action isn’t quite the same as saying that professional economists couldn’t come up with some solutions.  It’s just that neither the right or the left seems much interested in listening to what they have to say.  The flight from Keynesian solutions to the recession actually was widely shared.  It is inexplicable in rational terms, especially by Democrats who were going to be left holding the bag in future elections.  Yet it happened.  Probably the same goes for constructive policies aimed at building a better American future.

Paul Krugman, “How to Get it Wrong,” NYT, 15 September 2014.

Neil Irwin, “A Crisis of Faith in the Global Elite,” NYT, September 2014.

Neil Irwin, “Why the Middle Class Isn’t Buying the Talk About a Strong Recovery,” NYT, 22 August 2014.

International sex standards.

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According to a 2005 internet survey done by the Durex condom company—“Butch, I work for Mr. E. H. Harriman of the Union Pacific Railroad, and…”—the average respondent had sex 103 times a year and spent just under 20 minutes per time on foreplay. On the other hand, the mean is 109 times (twice a week) and 21 minutes on foreplay.

Who are the big losers in this international competition? Far and away, it’s the Japanese: they average 46 times a year. Less than four times a month. It must be like a subscription to a magazine: they call the January and July issues the January-February and July-August issues, but they aren’t any bigger. You’re just left wandering around the house looking at back issues of National Geographic.

The trajectory of Japan’s population has shifted from growth to decline. In 2007 Japan’s population reached its highest historical level at 128 million people, then it began to fall. If the country stays on this track there are projected to be only 87 million people by 2060. Of these, almost half will be aged 65 or over. Yikes! Projecting out to 2100, there might be no Japanese at all. That’s probably good news for the Council of the Learned Elders of Blue-Fin Tuna.

There are broad social and economic explanations for the change in Japanese demography. However, the issue has revealed several curious elements of Japanese culture as well. Social status and reputation are very important in Japanese society. Mess up in public on something and you can be tarred for life. So, lots of young men who have had some sort of embarrassment have become “shut-in” living with their parents and withdrawing from life. This is probably good for the on-line games and porn industries.

Interestingly, the Japanese are followed by Hong Kong (79 times a year), India (82), and China (90).   Why do Asians have less sex? A housing shortage that leads to a lack of privacy (self-conscious family limitation)? Government anti-natalism in societies threatened by over-population? Furthermore, if NPR finds out, will we have to listen to heart-rending stories about how people in western industrial countries are using up all the orgasms without concern for sex-starved Bangladeshis? Will environmentalists re-discover Wilhelm Reich and try to extend the Kyoto Protocol to cover an “orgone hole”?

Who are the winners? Inevitably, it’s the French (137 times a year). Two to three times a week, and almost 44 hours of foreplay. Americans and Israelis[1] clock in at 111 times a year and just under twenty minutes of foreplay per encounter. With stats like this to fall back on, American comedians and politicians (but I repeat myself) making fun of French military prowess just isn’t going to dent French national self-confidence.

Obviously, there’s a generational element here. It is young people who are most comfortable using the internet and least inhibited about answering questions on it, so the survey probably didn’t capture the experience of the middle aged. All the same, among the digerati, there is a big range of sexual practices. One suspects that the French are using the internet to access photos of Anna Kournikova falling out of her dress, while the Chinese are pirating industrial designs.

 

See: Atlantic Monthly, January/February 2005, p. 56; “Japan’s population crisis,” The Week, 17 January 2014, p. 11

[1] Apparently we have more in common than just a hatred of radical Muslims.

 

The heirs of Mustapha Kemal

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Turkey has been an emphatically “secular” country since its foundation. Mustapha Kemal “Ataturk” (“Father of the Turks”) wanted a secular state, not one of those messed up backward Arab countries. He prohibited the wearing of the fez for men and veils for women. He granted women equal rights with men (including the outlawing of polygamy). He insisted upon the separation of Church and State. This included banning the “sharia” (Islamic religious law).   Kemal was a general and the army he created has been the guardian of Turkish identity since its foundation. The army has overthrown governments from time to time when they strayed too far from honest or secular government. Explicitly religious parties have been banned from time to time.

A bunch of the religious politicians migrated from the banned parties to the Justice and Development Party, which was formally not a religious party. (Wink, wink.) In 2002 the Justice and Development Party (AKP) won a majority in the parliament and formed a government under prime minister Recep Tayyip Erdogan. Hostility soon mounted between the AKP and the army. In 2007 the generals were alarmed by the direction being taken by the AKP. They made a veiled threat of a coup. Many Turks took offense at the threat and voted for the AKP in the next election, increasing its majority. In 2008 the army tried to get the Constitutional Court to declare the AKP illegal on the grounds that it was trying to impose the “sharia” on the country. The Court rejected this charge. The AKP government then launched a hunt for conspirators among the ranks of present and—especially—retired officers. From 2008 to 2010 hundreds of officers were arrested and many were charged with conspiring to commit terrorist offenses. At the same time journalists, professors, and human-rights activists also were targeted. The government alleged a plot to provoke Islamists into violence, then to use that as a justification for a new military government in place of the AKP. The government leaked a huge file of documents to the press. The army’s response is that all the government has found are the records of contingency planning for an Islamist revolt.

“The struggle for Turkey’s soul,” The Week, 26 March 2010, p. 15.

The quarrel between the secularist military and the democratically-elected AKP has important implications. First, Turkey has been trying to get into the European Union. The Europeans are deeply concerned about Muslim immigration and Muslim fundamentalism. What Frenchman wants to see Notre Dame turned into a mosque? So the prospect of a fundamentalist government in Turkey does nothing for the country’s prospects of admission into the European Union.

Second, the United States sees Turkey as an important regional power in an area of American concern. The Greeks are nice, but the Turks are tough. The Turks offer a model of what other Muslim countries might become if they would just get their ten pounds in a five pound bag. Turkey borders on the Kurdish part of Iraq and contains its own large Kurdish population. The possibility of Kurdish nationalism messing up conditions in both Iraq and Turkey is very real. Turkey was the one Muslim state that was reasonably pro-Israel. American officials dread that “one man, one vote” in an Islamist Turkey might take place only one time, leaving the country in the hands of a pro-fundamentalist, pro-Iranian, and anti-American government.

Third, ISIS is on the southern border. So the Army will protect the Republic, right?

The Blood of Victory.

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Cotton may be the “fabric of our lives,” but oil makes everything run.

How much oil are we using? More and more each year: 60 million barrels a day in 1985, 84 million barrels a day in 2009; probably 114 million barrels a day in 2035. Oil use will probably accelerate as “developing nations” (Chinas, India), well, develop.

One problem is that there is a finite amount of oil in the earth. But how much is that? No one knows for sure. The current estimate is 1.2 trillion barrels. This is pretty hazy, actually. There may be lots more oil than people previously thought. Still, even “bullish” estimates suggest that we may have enough oil—produced at a rising cost—to provide oil for twenty or thirty or even forty years. So I’ll probably be dead before it runs out, but most people on the earth today will not. In the meantime, world demand for oil drives the exploration for new oil reserves into new areas.  As one oil company spokesman put it, “this is where nature put the oil.  You want to find oil, you have to go where it is.”

Some of the oil exploration sites are in extremely challenging environments.  There are undersea deposits in the Atlantic Ocean off the coast of Brazil, in the Arctic Ocean, and off the coasts of the United States. The American sites are problematic. People first started drilling for oil off-shore in the Gulf of Mexico in about 1950.  Success in the Gulf led to oil exploration elsewhere.  However, in 1969 there occurred a disastrous oil-rig blow-out in the Santa Barbara Channel in California.  The reaction put a stop to off-shore drilling wherever the oil industry was not already powerful.  Both the East Coast and the West Coast were soon out of bounds.  In contrast, Texas and Louisiana were already in the thrall of the oil industry.  Off-shore oil drilling became concentrated in the Gulf: there are about 4,000 oil rigs operating there now.

Since 2005 there has been a tremendous growth in the number of off-shore oil rigs world-wide.  There are about 2,500 off-shore oil and natural gas rigs around the world outside the Gulf of Mexico.  The number of the foreign off-shore rigs will expand.  Brazil claims a recently-discovered under-sea field 200 miles out in the Atlantic.  The oil deposits are estimated at 15 billion barrels.  Tapping into these fields would raise Brazil to the ranks of Canada and Nigeria among oil-producers.  For a rapidly developing economy with all sorts of needs and aspirations, this chance is too good for Brazil to pass up.  There are serious technical difficulties because the oil is four miles down.  The example of British Petroleum’s “Deepwater Horizon,” which blew up and blew out in Spring 2010, sends shivers down the spines of environmentalists.

Environmentalists go crazy over the risks. The “Deepwater Horizon” blow-out, and the resulting spill, gave them a lot of ammunition. How are you going to contain an oil spill four miles down if you couldn’t contain one a mile down? How are you going to contain a spill in the stormy Atlantic Ocean if you couldn’t control one in the comparatively tranquil Gulf of Mexico? Alternative oil sources don’t look much better. The Canadians have been extracting oil from “tar sands” in Alberta and the US is extracting oil from shale rock in the Western states. Getting oil out of tar sands requires six barrels of water for every barrel of oil produced. Water is nearly as scarce as is oil.

What to do? Well, if you’re running an oil company, you look in places that have weak environmental regulations and a corrupt government. “Nigeria is for drillers” bumper-stickers should start popping up all over the place. Ecuador, Peru, and Costa Guano should also start to figure in oil company reports.

See: “The search for oil,” The Week, 17 December 2010, p. 15; “Oil rigs: cities at sea,” The Week, 21 May 2010, p. 13.