The media and politicians often tell us something like “Last period’s” result was the worst in “n” periods. Example: Last year’s murder rate was the highest in ten years. They then go on to lament how things have degenerated and to blame someone.
By itself, this kind of statement conveys no useful information about the message topic.
Suppose the underlying murder rate is constant. Due to random fluctuations, each year’s realized murder rate will be different. No matter how large is the highest realized murder rate to date and how small the lowest murder rate to date, the highest and lowest will be surpassed over time. The probability that the media and politicians will jump on this when it occurs is about 1.
Given a murder rate so high that it its probability of being realized in a year is only 10%, then it ought to be realized about once in ten years. The probability that the media and politicians will jump on this when it occurs is about 1. Assuming independence, the probability of not seeing such a high murder rate in ten years is 35%, i.e., there is a probability of 65% of seeing at least one year in a ten year period with such a high murder rate.
Moral: That the media and politicians make a big deal of unusually good or bad outcomes is something that often can be chalked up to either an agenda or ignorance. In either case, it says more about the person than the message topic.
One important probability is the probability that something has changed (good or bad), given that the media and politicians deliver their message. Since it is about equally likely that the media and politicians will deliver their message whether or not there has been an underlying change in circumstances, the fact that they deliver their message conveys approximately no information.
Wednesday, June 28, 2006
Tradeoffs: Humvee armor
Life is about tradeoffs. Much of what you see in the media and from politicians ignores the tradeoffs. That is one reason why you can’t trust either.
From time to time, this blog will suggest some of the tradeoffs on important issues (and some not important ones) that ought to be considered.
Here is an example.
There was a lot of initial criticism from the media and politicians about Humvees having inadequate armor.
The more armor, the less chance of the occupants being killed from enemy action. On the other hand, armor makes the vehicle less stable and the more chance there is of the occupants (and bystanders) being killed from accidents involving loss of control (e.g., rollovers). Since the percentage of time Humvee driving is in combat conditions is low, there seems a reasonable chance that the overall Humvee related fatality rate is increased by adding armor.
I have no idea what the net effect has been. But the initial media and political focus on one side of the issue was misleading. Some of the media addressed the tradeoff later, with nothing like the initial misleading exposure. Politicians have yet to provide balance.
Here is a link to an article on the topic. I have no idea what the net effect has been. But the initial media and political focus on one side of the issue was misleading.
Go to article
From time to time, this blog will suggest some of the tradeoffs on important issues (and some not important ones) that ought to be considered.
Here is an example.
There was a lot of initial criticism from the media and politicians about Humvees having inadequate armor.
The more armor, the less chance of the occupants being killed from enemy action. On the other hand, armor makes the vehicle less stable and the more chance there is of the occupants (and bystanders) being killed from accidents involving loss of control (e.g., rollovers). Since the percentage of time Humvee driving is in combat conditions is low, there seems a reasonable chance that the overall Humvee related fatality rate is increased by adding armor.
I have no idea what the net effect has been. But the initial media and political focus on one side of the issue was misleading. Some of the media addressed the tradeoff later, with nothing like the initial misleading exposure. Politicians have yet to provide balance.
Here is a link to an article on the topic. I have no idea what the net effect has been. But the initial media and political focus on one side of the issue was misleading.
Go to article
Monday, June 26, 2006
Stealing from your fellow citizens
Being a Florida resident, I just received this email letter from my Senator, Bill Nelson.
This is an example of how Government rewards people for making poor decisions.
Hurricanes are anticipated in Florida. If Floridians were not confident that the rest of the country would be required to reimburse them for much of their hurricane damage, Floridians, faced with the real costs of living in Florida, would build stronger infrastructure, stronger homes, etc. Just as important, they would build less in dangerous areas, like on the Ocean or the Gulf.
Subsidizing Floridians for known events distorts the economy in a way such that it is possible to readjust production so that everyone is better off (technically, the subsidy ensures that equilibrium is not Pareto-optimum).
It is jus plain dumb (but thanks for your money, anyway).
At this point you are probably nodding your head in agreement and ridiculing Government. But the real problem is that Bill Nelson gets elected in return for bribes like this.
As Pogo said, we have met the enemy and he is us.
Even worse, see if you can think up a set of “rules” for Government that would induce individuals, in and out of Government, to behave in the kind of efficient (Pareto-optimal?) manner we all claim we want to see. Don't forget to assume that everyone acts in their own self interest (in the economics vocabulary, marginal, not general analysis).
I conjecture that no such set of rules exists.
Here is the letter.
June 26, 2006
“Dear Floridian,I am pleased to report that Congress has authorized $5.2 billion for disaster relief to Florida and other states hit by hurricanes last year. The funding is included in the Iraq war funding supplemental bill.
These federal funds are especially important to communities in the Panhandle that were hit hard by Hurricane Dennis. Although previous Federal disaster relief excluded damage caused by this storm, this new funding will help all communities damaged by storms last year, including Dennis, Rita, Katrina, and Wilma.
The relief will come in the form of disaster Community Development Block Grants (CDBGs), with the Department of Housing and Urban Development dispersing the funds among eligible states, and states then allocating the money to counties and municipalities. CDBG funds are often used for long-term recovery efforts, housing and business assistance, infrastructure reconstruction, mitigation efforts, and public services.
The following counties are eligible for the funds: Bay, Brevard, Broward, Calhoun, Charlotte, Collier, DeSoto, Dixie, Escambia, Franklin, Gadsden, Glades, Gulf, Hardee, Hendry, Highlands, Holmes, Indian River, Jackson, Jefferson, Lee, Leon, Levy, Liberty, Martin, Miami-Dade, Monroe, Okaloosa, Okeechobee, Osceola, Palm Beach, Polk, Santa Rosa, Sarasota, St. Lucie, Taylor, Wakulla, Walton, and Washington.
Sincerely,
Bill Nelson
U.S. Senator”
This is an example of how Government rewards people for making poor decisions.
Hurricanes are anticipated in Florida. If Floridians were not confident that the rest of the country would be required to reimburse them for much of their hurricane damage, Floridians, faced with the real costs of living in Florida, would build stronger infrastructure, stronger homes, etc. Just as important, they would build less in dangerous areas, like on the Ocean or the Gulf.
Subsidizing Floridians for known events distorts the economy in a way such that it is possible to readjust production so that everyone is better off (technically, the subsidy ensures that equilibrium is not Pareto-optimum).
It is jus plain dumb (but thanks for your money, anyway).
At this point you are probably nodding your head in agreement and ridiculing Government. But the real problem is that Bill Nelson gets elected in return for bribes like this.
As Pogo said, we have met the enemy and he is us.
Even worse, see if you can think up a set of “rules” for Government that would induce individuals, in and out of Government, to behave in the kind of efficient (Pareto-optimal?) manner we all claim we want to see. Don't forget to assume that everyone acts in their own self interest (in the economics vocabulary, marginal, not general analysis).
I conjecture that no such set of rules exists.
Here is the letter.
June 26, 2006
“Dear Floridian,I am pleased to report that Congress has authorized $5.2 billion for disaster relief to Florida and other states hit by hurricanes last year. The funding is included in the Iraq war funding supplemental bill.
These federal funds are especially important to communities in the Panhandle that were hit hard by Hurricane Dennis. Although previous Federal disaster relief excluded damage caused by this storm, this new funding will help all communities damaged by storms last year, including Dennis, Rita, Katrina, and Wilma.
The relief will come in the form of disaster Community Development Block Grants (CDBGs), with the Department of Housing and Urban Development dispersing the funds among eligible states, and states then allocating the money to counties and municipalities. CDBG funds are often used for long-term recovery efforts, housing and business assistance, infrastructure reconstruction, mitigation efforts, and public services.
The following counties are eligible for the funds: Bay, Brevard, Broward, Calhoun, Charlotte, Collier, DeSoto, Dixie, Escambia, Franklin, Gadsden, Glades, Gulf, Hardee, Hendry, Highlands, Holmes, Indian River, Jackson, Jefferson, Lee, Leon, Levy, Liberty, Martin, Miami-Dade, Monroe, Okaloosa, Okeechobee, Osceola, Palm Beach, Polk, Santa Rosa, Sarasota, St. Lucie, Taylor, Wakulla, Walton, and Washington.
Sincerely,
Bill Nelson
U.S. Senator”
Sunday, June 25, 2006
The New York Times’s overblown OxyContin abuse story
Here is a link to a STATS article “The New York Times' Other WMD Problem”. It discusses another example of the NYT’s poor quality control.
The NYT is not trustworthy.
Here are some excerpts from the STATS article.
“In short, the Sentinel wildly over-estimated the number of people it claimed had died from overdoses of oxycodone (the active ingredient in OxyContin) by failing to scrutinize state law enforcement data. Most of those who died turned out to have consumed, in addition to OxyContin, a cocktail of illegal drugs.”
“Still, at least the Sentinel apologized and corrected the record. No such correction or apology has ever issued from the New York Times for taking a leading role in prompting the idea that OxyContin was a weapon of mass destruction in the nation's heartland.”
““Heck, we already know it’s pretty epidemic down here,” Capt. Minor Allen of the Hazard Police Department in southeastern Kentucky told Times readers in 2001 (“Cancer Painkillers Pose New Abuse Threat” by Francis X. Clines with Barry Meier, Feb 9.) “Abuse of this drug has become unbelievable in the last year, with probably 85 to 90 percent of our field work now related to oxys,” he continued. “We find them carrying pill pushers that are sold in drugstores to help elderly people swallow their prescriptions.””
“Unfortunately, the Times placed far too much trust in the numbers being thrown out by law enforcement and legal sources — as did other news organizations, especially television, which covered Operation Oxyfest like children covering candy.”
“As the Washington Post’s television critic Tom Shales wrote in Electronic Media just a few weeks after OxyContin abuse dominated February sweeps (March 26, 2001),”
““there is no hard evidence that OxyContin played a key role in 59 Kentuckians keeling over. David Jones, an official with the Kentucky State Medical Examiner’s Office, looked into the claim and wrote a letter to Purdue Pharma: ‘I am unaware of any reliable data in Kentucky that proves OxyContin is causing a lot of deaths. In the State M.E. Office, we are seeing an increase in the number of deaths from ingesting several different prescription drugs and mixing them with alcohol. OxyContin is sometimes one of these drugs.’”
“For confirmation, the Free Times turned to David W. Jones, executive director of the Kentucky State Medical Examiner’s office. He asserts that ‘as far as deaths go, I’ve heard different numbers in different places at different times; I have no idea where these people are getting their facts and figures.’ While he stresses that not every drug-related death is necessarily reported to his office, according to his data there were 27 oxycodone-related deaths in the entire state in 2000…”
““…Two of the 27 victims, he explains were found to have both oxycodone and alcohol in their bodies, with death caused by the interaction of two nervous system depressants. What’s more, 23 others had a head-spinning multiplicity of other drugs in their systems, including highly potent prescription painkillers such as Diludad and Fentanyl, as well as powerful illegal drugs like cocaine and heroin. In the final analysis, Jones reveals, only two of the 27 fatalities can be shown to have been due to the effects of oxycodone alone – not just two in eastern Kentucky, two in the entire state.””
The NYT is not trustworthy.
Here are some excerpts from the STATS article.
“In short, the Sentinel wildly over-estimated the number of people it claimed had died from overdoses of oxycodone (the active ingredient in OxyContin) by failing to scrutinize state law enforcement data. Most of those who died turned out to have consumed, in addition to OxyContin, a cocktail of illegal drugs.”
“Still, at least the Sentinel apologized and corrected the record. No such correction or apology has ever issued from the New York Times for taking a leading role in prompting the idea that OxyContin was a weapon of mass destruction in the nation's heartland.”
““Heck, we already know it’s pretty epidemic down here,” Capt. Minor Allen of the Hazard Police Department in southeastern Kentucky told Times readers in 2001 (“Cancer Painkillers Pose New Abuse Threat” by Francis X. Clines with Barry Meier, Feb 9.) “Abuse of this drug has become unbelievable in the last year, with probably 85 to 90 percent of our field work now related to oxys,” he continued. “We find them carrying pill pushers that are sold in drugstores to help elderly people swallow their prescriptions.””
“Unfortunately, the Times placed far too much trust in the numbers being thrown out by law enforcement and legal sources — as did other news organizations, especially television, which covered Operation Oxyfest like children covering candy.”
“As the Washington Post’s television critic Tom Shales wrote in Electronic Media just a few weeks after OxyContin abuse dominated February sweeps (March 26, 2001),”
““there is no hard evidence that OxyContin played a key role in 59 Kentuckians keeling over. David Jones, an official with the Kentucky State Medical Examiner’s Office, looked into the claim and wrote a letter to Purdue Pharma: ‘I am unaware of any reliable data in Kentucky that proves OxyContin is causing a lot of deaths. In the State M.E. Office, we are seeing an increase in the number of deaths from ingesting several different prescription drugs and mixing them with alcohol. OxyContin is sometimes one of these drugs.’”
“For confirmation, the Free Times turned to David W. Jones, executive director of the Kentucky State Medical Examiner’s office. He asserts that ‘as far as deaths go, I’ve heard different numbers in different places at different times; I have no idea where these people are getting their facts and figures.’ While he stresses that not every drug-related death is necessarily reported to his office, according to his data there were 27 oxycodone-related deaths in the entire state in 2000…”
““…Two of the 27 victims, he explains were found to have both oxycodone and alcohol in their bodies, with death caused by the interaction of two nervous system depressants. What’s more, 23 others had a head-spinning multiplicity of other drugs in their systems, including highly potent prescription painkillers such as Diludad and Fentanyl, as well as powerful illegal drugs like cocaine and heroin. In the final analysis, Jones reveals, only two of the 27 fatalities can be shown to have been due to the effects of oxycodone alone – not just two in eastern Kentucky, two in the entire state.””
Saturday, June 24, 2006
Richard Feynman's Douglas Robb Memorial Lectures
Thanks to my friend Neal Hitzig for directing me to this link.
http://www.vega.org.uk/video/subseries/8
Here is some information from the website.
A set of four priceless archival recordings from the University of Auckland (New Zealand) of the outstanding Nobel prize-winning physicist Richard Feynman - arguably the greatest science lecturer ever. Although the recording is of modest technical quality the exceptional personal style and unique delivery shine through.
A gentle lead-in to the subject, Feynman starts by discussing photons and their properties.
http://www.vega.org.uk/video/programme/45
What are reflection and transmission, and how do they work?
http://www.vega.org.uk/video/programme/46
Feynman diagrams and the intricacies of particle interaction.
http://www.vega.org.uk/video/programme/47
What does it mean, and where is it all leading?
http://www.vega.org.uk/video/programme/48
http://www.vega.org.uk/video/subseries/8
Here is some information from the website.
A set of four priceless archival recordings from the University of Auckland (New Zealand) of the outstanding Nobel prize-winning physicist Richard Feynman - arguably the greatest science lecturer ever. Although the recording is of modest technical quality the exceptional personal style and unique delivery shine through.
A gentle lead-in to the subject, Feynman starts by discussing photons and their properties.
http://www.vega.org.uk/video/programme/45
What are reflection and transmission, and how do they work?
http://www.vega.org.uk/video/programme/46
Feynman diagrams and the intricacies of particle interaction.
http://www.vega.org.uk/video/programme/47
What does it mean, and where is it all leading?
http://www.vega.org.uk/video/programme/48
Friday, June 23, 2006
A Week At The Gym
This was sent to me by a longtime friend, retired, of course.
For my sixty fifth birthday this year, my wife (the dear) purchased a week of personal training at the local health club for me. Although I am still in great shape since playing on my college football team 45 years ago, Idecided it would be a good idea to go ahead and give it a try.
I called the club and made my reservations with a personal trainer named Belinda, who identified herself as a 26-year-old aerobics instructor and model for athletic clothing and swim wear. My wife seemed pleased with my enthusiasm to get started!
The club encouraged me to keep a diary to chart my progress . . .
Dear Diary:
MONDAY:
Started my day at 6:00 a.m.Tough to get out of bed, but found it was well worth it when I arrived atthe health club to find Belinda waiting for me.She is something of a Greek goddess - with blond hair, dancing eyes anddazzling white smile.
Woo Hoo!!
Belinda gave me a tour and showed me the machines. She took my pulse after five minutes on the treadmill. She was alarmed that my pulse was so fast, but I attribute it to standing next to her in her Lycra aerobic outfit.
I enjoyed watching the skillful way in which she conducted her aerobics class after my workout today. Very inspiring! Belinda was encouraging as I did my sit-ups, although my gut was already aching from holding it in the whole time she was around. This is going to bea FANTASTIC week!!
TUESDAY
I drank a whole pot of coffee, but I finally made it out the door.
Belinda made me lie on my back and push a heavy iron bar into the air when she put weights on it! My legs were a little wobbly on the treadmill, but I made the full mile. Belinda's rewarding smile made it all worthwhile. I feel GREAT!!
It's a whole new life for me.
WEDNESDAY
The only way I can brush my teeth is by laying on the toothbrush on the counter and moving my mouth back and forth over it. I believe I have a hernia in both pectorals. Driving was OK as long as I didn't try to steer or stop. I parked on top of a GEO in the club parking lot.
Belinda was impatient with me, insisting that my screams bothered other clubmembers. Her voice is a little too perky for early in the morning and when she scolds, she gets this nasal whine that is VERY annoying.
My chest hurt when I got on the treadmill, so Belinda put me on the stairmonster. Why the hell would anyone invent a machine to simulate an activity rendered obsolete by elevators? Belinda told me it would help me get in shape and enjoy life. She said some other shit too.
THURSDAY
Belinda was waiting for me with her vampire-like teeth exposed as her thin, cruel lips were pulled back in a full snarl. I couldn't help being a half an hour late, it took me that long to tie my shoes.
Belinda took me to work out with dumbbells. When she was not looking, I ran and hid in the men's room. She sent Lars to find me. Then, as punishment, she put me on the rowing machine -- which I sank.
FRIDAY
I hate that bitch Belinda more than any human being has ever hated any other human being in the history of the world. Stupid, skinny, anemic little cheerleader. If there was a part of my body I could move without unbearable pain, I wouldbeat her with it.
Belinda wanted me to work on my triceps. I don't have any triceps! And if you don't want dents in the floor, don't hand me the M----- f-----barbells or anything that weighs more than a sandwich.
The treadmill flung me off and I landed on a health and nutrition teacher. Why couldn't it have been someone softer, like the drama coach or the Choir director?
SATURDAY
Belinda left a message on my answering machine in her grating, shrilly voice wondering why I did not show up today. Just hearing her made me want to smash the machine with my planner. However, I lacked the strength to even use the TV remote and ended up catching eleven straight hours of the Weather Channel.
SUNDAY
I'm having the Church van pick me up for services today so I can go and thank GOD that this week is over. I will also pray that next year my wife (the bitch) will choose a gift for me that is fun -- like a root canal or a vasectomy.
For my sixty fifth birthday this year, my wife (the dear) purchased a week of personal training at the local health club for me. Although I am still in great shape since playing on my college football team 45 years ago, Idecided it would be a good idea to go ahead and give it a try.
I called the club and made my reservations with a personal trainer named Belinda, who identified herself as a 26-year-old aerobics instructor and model for athletic clothing and swim wear. My wife seemed pleased with my enthusiasm to get started!
The club encouraged me to keep a diary to chart my progress . . .
Dear Diary:
MONDAY:
Started my day at 6:00 a.m.Tough to get out of bed, but found it was well worth it when I arrived atthe health club to find Belinda waiting for me.She is something of a Greek goddess - with blond hair, dancing eyes anddazzling white smile.
Woo Hoo!!
Belinda gave me a tour and showed me the machines. She took my pulse after five minutes on the treadmill. She was alarmed that my pulse was so fast, but I attribute it to standing next to her in her Lycra aerobic outfit.
I enjoyed watching the skillful way in which she conducted her aerobics class after my workout today. Very inspiring! Belinda was encouraging as I did my sit-ups, although my gut was already aching from holding it in the whole time she was around. This is going to bea FANTASTIC week!!
TUESDAY
I drank a whole pot of coffee, but I finally made it out the door.
Belinda made me lie on my back and push a heavy iron bar into the air when she put weights on it! My legs were a little wobbly on the treadmill, but I made the full mile. Belinda's rewarding smile made it all worthwhile. I feel GREAT!!
It's a whole new life for me.
WEDNESDAY
The only way I can brush my teeth is by laying on the toothbrush on the counter and moving my mouth back and forth over it. I believe I have a hernia in both pectorals. Driving was OK as long as I didn't try to steer or stop. I parked on top of a GEO in the club parking lot.
Belinda was impatient with me, insisting that my screams bothered other clubmembers. Her voice is a little too perky for early in the morning and when she scolds, she gets this nasal whine that is VERY annoying.
My chest hurt when I got on the treadmill, so Belinda put me on the stairmonster. Why the hell would anyone invent a machine to simulate an activity rendered obsolete by elevators? Belinda told me it would help me get in shape and enjoy life. She said some other shit too.
THURSDAY
Belinda was waiting for me with her vampire-like teeth exposed as her thin, cruel lips were pulled back in a full snarl. I couldn't help being a half an hour late, it took me that long to tie my shoes.
Belinda took me to work out with dumbbells. When she was not looking, I ran and hid in the men's room. She sent Lars to find me. Then, as punishment, she put me on the rowing machine -- which I sank.
FRIDAY
I hate that bitch Belinda more than any human being has ever hated any other human being in the history of the world. Stupid, skinny, anemic little cheerleader. If there was a part of my body I could move without unbearable pain, I wouldbeat her with it.
Belinda wanted me to work on my triceps. I don't have any triceps! And if you don't want dents in the floor, don't hand me the M----- f-----barbells or anything that weighs more than a sandwich.
The treadmill flung me off and I landed on a health and nutrition teacher. Why couldn't it have been someone softer, like the drama coach or the Choir director?
SATURDAY
Belinda left a message on my answering machine in her grating, shrilly voice wondering why I did not show up today. Just hearing her made me want to smash the machine with my planner. However, I lacked the strength to even use the TV remote and ended up catching eleven straight hours of the Weather Channel.
SUNDAY
I'm having the Church van pick me up for services today so I can go and thank GOD that this week is over. I will also pray that next year my wife (the bitch) will choose a gift for me that is fun -- like a root canal or a vasectomy.
Saturday, June 17, 2006
Corn-ethanol for cars?
Here is another example of how Government meddling with the economy reduces the standard of living.
If two products or processes accomplish a job and one is cheaper, then replacing the cheaper one with the more expensive one reduces the standard of living.
According to the Wall Street Journal and others, Government’s subsidizing and/or forcing corn-ethanol use in cars increases the cost per mile of driving. It also increases oil demand, since it requires more than a gallon of oil to produce a gallon of corn-ethanol and the latter has less energy per gallon.
By increasing oil demand, it increases the price of oil and the price of all products that use oil in the production or delivery process.
Why is it so easy for Government to mess up the economy like this? Because too many voters either vote their own immediate interests (e.g., farmers) or fail to understand the issues.
The problem is not Government. The problem is us.
The Wall Street Journal’s editorial can be found here “An Energy Field of Dreams”.
Here are some excerpts.
“We'd say the world had gone mad, except that this is a fairly typical case study in how political meddling distorts energy markets. Weary of high gas prices, drivers can be forgiven for desiring a "miracle" fuel that is allegedly cheap and clean. But the corn farmers, ethanol producers, politicians and environmentalists who have promoted the new ethanol mania have no excuse for peddling misinformation.”
“We have nothing against corn-based ethanol per se, assuming it competes in the market on the same basis as other fuels. Ethanol's problem is that it is expensive to make and provides far fewer miles per gallon than gasoline. So its supporters have worked the political system to subsidize ethanol, and more recently to force Americans to buy it.”
“U.S. taxpayers today pay twice for ethanol: once in crop subsidies to corn farmers and again in a 51-cent subsidy for every gallon of ethanol. Without such a subsidy, ethanol simply wouldn't be cost competitive with gasoline. Then last year, Congress went further and passed a new ethanol mandate, requiring drivers to use at least 7.5 billion gallons annually by 2012.”
“Sorry. The most widely cited research on this subject comes from Cornell's David Pimental and Berkeley's Ted Patzek. They've found that it takes more than a gallon of fossil fuel to make one gallon of ethanol--29% more. That's because it takes enormous amounts of fossil-fuel energy to grow corn (using fertilizer and irrigation), to transport the crops and then to turn that corn into ethanol. The Saudis ought to love the stuff.”
If two products or processes accomplish a job and one is cheaper, then replacing the cheaper one with the more expensive one reduces the standard of living.
According to the Wall Street Journal and others, Government’s subsidizing and/or forcing corn-ethanol use in cars increases the cost per mile of driving. It also increases oil demand, since it requires more than a gallon of oil to produce a gallon of corn-ethanol and the latter has less energy per gallon.
By increasing oil demand, it increases the price of oil and the price of all products that use oil in the production or delivery process.
Why is it so easy for Government to mess up the economy like this? Because too many voters either vote their own immediate interests (e.g., farmers) or fail to understand the issues.
The problem is not Government. The problem is us.
The Wall Street Journal’s editorial can be found here “An Energy Field of Dreams”.
Here are some excerpts.
“We'd say the world had gone mad, except that this is a fairly typical case study in how political meddling distorts energy markets. Weary of high gas prices, drivers can be forgiven for desiring a "miracle" fuel that is allegedly cheap and clean. But the corn farmers, ethanol producers, politicians and environmentalists who have promoted the new ethanol mania have no excuse for peddling misinformation.”
“We have nothing against corn-based ethanol per se, assuming it competes in the market on the same basis as other fuels. Ethanol's problem is that it is expensive to make and provides far fewer miles per gallon than gasoline. So its supporters have worked the political system to subsidize ethanol, and more recently to force Americans to buy it.”
“U.S. taxpayers today pay twice for ethanol: once in crop subsidies to corn farmers and again in a 51-cent subsidy for every gallon of ethanol. Without such a subsidy, ethanol simply wouldn't be cost competitive with gasoline. Then last year, Congress went further and passed a new ethanol mandate, requiring drivers to use at least 7.5 billion gallons annually by 2012.”
“Sorry. The most widely cited research on this subject comes from Cornell's David Pimental and Berkeley's Ted Patzek. They've found that it takes more than a gallon of fossil fuel to make one gallon of ethanol--29% more. That's because it takes enormous amounts of fossil-fuel energy to grow corn (using fertilizer and irrigation), to transport the crops and then to turn that corn into ethanol. The Saudis ought to love the stuff.”
Thursday, June 15, 2006
Money flows into and out of the stock market
Does money flow into or out of the stock market (the secondary market)? Don’t dollars of stock purchased always equals dollars of stock sold? So, how can there be a net dollar flow into or out of the stock market?
Wednesday, June 14, 2006
Al Gore and Global Warming
My friend James Kitler, trained as an engineer sent me a website article that debunks Al Gore’s “The Inconvenient Truth”.
Here is an excerpt to convey the flavor.
“"Scientists have an independent obligation to respect and present the truth as they see it," Al Gore sensibly asserts in his film "An Inconvenient Truth", showing at Cumberland 4 Cinemas in Toronto since Jun 2. With that outlook in mind, what do world climate experts actually think about the science of his movie? "
“Professor Bob Carter of the Marine Geophysical Laboratory at James Cook University, in Australia gives what, for many Canadians, is a surprising assessment: "Gore's circumstantial arguments are so weak that they are pathetic. It is simply incredible that they, and his film, are commanding public attention."”
It goes on from there.
Stanford University has a Solar Center that has lots of good stuff on global warming. There is an interesting chart on the first page that suggests that climate is by far most correlated with solar activity. Looking at it makes you a skeptic with respect to Al Gore, although one chart is not a proof. On the other hand, having listened to Al Gore before, I have got to wonder how he could track down the truth even if he wanted to.
Looking down the links on Stanford University’s site, I found one quoting some researchers. Here are a couple of quotes.
“But the Earth is warming up, you say. Well, the evidence for that is very skimpy and not supported by an overwhelming quantity and quality of facts, as well as by the poor quality of surface temperature recordings.”
“Aside from the design- and human errors that may and do creep in when setting up instrumentation and taking readings, the readings are affected by the heat island effect generated in urban areas. The heat-island effect is substantial, measurable in communities of 250 or more residents, increasing over time as energy consumption and population density increase, and cannot be ignored. Determining accurate correction factors for individual areas in which temperature readings are taken in uncharacteristic hot-spots becomes difficult and even impossible if no corresponding records of readings exist for the surrounding rural areas, and as more and more weather stations in rural areas are being taken out of service.”
“However, for a number of years now, temperature measurements have been made via balloons and, in an even more thorough and comprehensive fashion, via satellites. The records established by those means show no or at worst only almost imperceptible global warming. Of course, those records are unbiased by human error and undistorted by the fact that temperature readings taken in urban areas are affected by the heat-island effects of the cities in which many are taken and that taint the results of global averaging of global temperature records.”
“What do they tell us about the highly-advertised claims of the world's climate alarmists relative to warming-induced droughts and floods?....”
“Climate alarmists claim that global warming will bring extremes of both floods and droughts to the world, and that the earth is now warmer than it has been in the entire past millennium. If these two claims were correct, we should clearly be seeing wet and dry periods that exceed the worst of the past half-millennium or more. In this extensive and well-calibrated record from the United States, however, we don't. Ergo, something is rotten in more than Denmark.”
“Curiously, and the Kyoto-hype advocates must surely be interested in that (or are they?), the record for the Sargasso Sea shows that the current sea-surface temperature is about half a degree Celsius below the average for the last 3000 years. Moreover, although the sea-surface temperature has recently increased somewhat but not quite reached the 3000-year average, it is rising in perfect synchronicity with the record of solar activity. It has done so before and will do so again.”
“Just as there were times in the past where it was much colder than it is now, so there were times when our globe was much warmer. The last period of a considerably warmer climate was during the Medieval Optimum, just before the Little Ice Age set in out of which we are climbing just now.”
“Superstitions, in spite of many voices of reason, brought about the witch hunts as the climate turned colder during the Little Ice Age. (See the paper by historian Wolfgang Behringer: Climatic Change and Witch-Hunting: The Impact of the Little Ice Age on Mentalities) Superstitions, in spite of many voices of reason, bring us now the witch hunts promoted by the proponents of the Kyoto accord. Such is the power of propaganda.”
There are lots more interesting links.
I am not a climate expert. But, being a Bayesian, I note that alarmists have seldom been right in the past and exhibit a characteristic behavior that does not instill confidence in me. So, my bet is that disaster is not imminent.
Even if global warming is an imminent problem, my preferred solution is fewer people. Smaller families, anyone?
Here is an excerpt to convey the flavor.
“"Scientists have an independent obligation to respect and present the truth as they see it," Al Gore sensibly asserts in his film "An Inconvenient Truth", showing at Cumberland 4 Cinemas in Toronto since Jun 2. With that outlook in mind, what do world climate experts actually think about the science of his movie? "
“Professor Bob Carter of the Marine Geophysical Laboratory at James Cook University, in Australia gives what, for many Canadians, is a surprising assessment: "Gore's circumstantial arguments are so weak that they are pathetic. It is simply incredible that they, and his film, are commanding public attention."”
It goes on from there.
Stanford University has a Solar Center that has lots of good stuff on global warming. There is an interesting chart on the first page that suggests that climate is by far most correlated with solar activity. Looking at it makes you a skeptic with respect to Al Gore, although one chart is not a proof. On the other hand, having listened to Al Gore before, I have got to wonder how he could track down the truth even if he wanted to.
Looking down the links on Stanford University’s site, I found one quoting some researchers. Here are a couple of quotes.
“But the Earth is warming up, you say. Well, the evidence for that is very skimpy and not supported by an overwhelming quantity and quality of facts, as well as by the poor quality of surface temperature recordings.”
“Aside from the design- and human errors that may and do creep in when setting up instrumentation and taking readings, the readings are affected by the heat island effect generated in urban areas. The heat-island effect is substantial, measurable in communities of 250 or more residents, increasing over time as energy consumption and population density increase, and cannot be ignored. Determining accurate correction factors for individual areas in which temperature readings are taken in uncharacteristic hot-spots becomes difficult and even impossible if no corresponding records of readings exist for the surrounding rural areas, and as more and more weather stations in rural areas are being taken out of service.”
“However, for a number of years now, temperature measurements have been made via balloons and, in an even more thorough and comprehensive fashion, via satellites. The records established by those means show no or at worst only almost imperceptible global warming. Of course, those records are unbiased by human error and undistorted by the fact that temperature readings taken in urban areas are affected by the heat-island effects of the cities in which many are taken and that taint the results of global averaging of global temperature records.”
“What do they tell us about the highly-advertised claims of the world's climate alarmists relative to warming-induced droughts and floods?....”
“Climate alarmists claim that global warming will bring extremes of both floods and droughts to the world, and that the earth is now warmer than it has been in the entire past millennium. If these two claims were correct, we should clearly be seeing wet and dry periods that exceed the worst of the past half-millennium or more. In this extensive and well-calibrated record from the United States, however, we don't. Ergo, something is rotten in more than Denmark.”
“Curiously, and the Kyoto-hype advocates must surely be interested in that (or are they?), the record for the Sargasso Sea shows that the current sea-surface temperature is about half a degree Celsius below the average for the last 3000 years. Moreover, although the sea-surface temperature has recently increased somewhat but not quite reached the 3000-year average, it is rising in perfect synchronicity with the record of solar activity. It has done so before and will do so again.”
“Just as there were times in the past where it was much colder than it is now, so there were times when our globe was much warmer. The last period of a considerably warmer climate was during the Medieval Optimum, just before the Little Ice Age set in out of which we are climbing just now.”
“Superstitions, in spite of many voices of reason, brought about the witch hunts as the climate turned colder during the Little Ice Age. (See the paper by historian Wolfgang Behringer: Climatic Change and Witch-Hunting: The Impact of the Little Ice Age on Mentalities) Superstitions, in spite of many voices of reason, bring us now the witch hunts promoted by the proponents of the Kyoto accord. Such is the power of propaganda.”
There are lots more interesting links.
I am not a climate expert. But, being a Bayesian, I note that alarmists have seldom been right in the past and exhibit a characteristic behavior that does not instill confidence in me. So, my bet is that disaster is not imminent.
Even if global warming is an imminent problem, my preferred solution is fewer people. Smaller families, anyone?
Tuesday, June 13, 2006
The New York Times Gives Me A Quick Laugh
Logging on to the NYT’s web site and the Sunday Magazine section, I noticed an article by Niall Ferguson (no relation). The website noted the title,
“Reason to Worry”,
along with the verbal bait
“Why you could be excused for feeling a little uneasy about the collapse in household savings, the rise in home-mortgage debt, a large and growing trade deficit and the fact that Asian countries hold so many U.S. treasuries. Go to Article”
I laughed because I am not worried about debt owed foreigners by the US. I figure if we owe somebody else something, as a country, they have to be careful of us, not the other way around.
Then I scanned the article. The writing is creative. How can you not appreciate this kind of language.
“Think of the economy of the United States as a dinosaur — one of those huge herbivores whose bulk shook the ground. A brachiosaur. A brontosaur. A diplodocus. Like them, the U.S. economy is mind-bogglingly enormous — two and a half times as big as the next largest economy in the world and almost as large as that of the six other members of the Group of Seven combined. The catch is that it has to consume almost incessantly to sustain its great heft.”
“Contrary to what we used to believe, leviathans like the diplodocus were not exactly sloths. It is now thought that they had the strength to stand on their hind legs in order to reach food at the top of trees. They may even have been able to run rather than merely plod. But it seems reasonable to assume that their reaction times were slow; it was a very long way from the diplodocus's tail to its brain. If a predator sank its fangs into that tail, it might have taken the diplodocus a few moments to feel the pain.”
“The big question about the dinosaurs is, of course, What caused their extinction? Why were so many species unable to evolve in response to environmental changes? The most common explanation is that a very sudden event, like a meteor's impact, gave the dinosaurs too little time to evolve and provided smaller and more dynamic life forms with an opportunity to take over.”
“An analogous question for economists is whether the United States is capable of evolving out of its present excessive indebtedness. Or could the global economic environment change so drastically as to threaten, if not extinction, then at least decline relative to smaller, more dynamic economies?”
No kidding, metaphor has become analysis.
Did I read right? “decline relative to smaller, more dynamic economies?” Isn’t that always going on? After all, if Microsoft goes up 1% and Widgets goes up 2%, then isn’t Microsoft declining relative to Widgets? A disaster in the making. Sheer genius.
At the bottom of the first page of the article, you see that Niall Ferguson is Laurence A. Tisch professor of history at Harvard University and the author of "Colossus: The Rise and Fall of the American Empire." Well, I guess that the American Empire will eventually fall. Probably the whole Universe, too, if I can believe Kaku. I’m just not so sure it’s as imminent as Prof. Ferguson makes out.
I continued scanning the article and found this nugget.
“As a result, there has been an immense rise in foreign ownership of American securities of all kinds, but especially government bonds. Foreign ownership of the U.S. federal debt passed the halfway mark in June 2004. About a third of corporate bonds are now in foreign hands, as is more than 13 percent of the U.S. stock market. One analyst has half-seriously calculated that at the current rate of foreign accumulation, the last U.S. Treasury held by an American will be purchased by the People's Bank of China on Feb. 9, 2012.”
Let’s see. Doesn’t this conclusion follow if the percentage of foreign owner ship of US debt increases, no matter by how little, and we forecast a continuation? Better yet, let’s do Prof. Ferguson one better and find, of all the possible period lengths ending with the most recent data, the period length with the biggest average daily increase in the percentage of foreign ownership of US debt. Let’s extend that. Maybe we can move doomsday a lot closer than 2012.
I am willing to bet Prof. Ferguson $1 million that on 1/1/2013, Some US debt will be owned by US citizens. Heck, I’ll even make it 12/31/2013.
I’m all for selling a lot more debt to the Chinese and using the proceeds to buy Chinese consumer goods. Of course, my strategy would be to default on the debt when the Chinese wise up. If third world countries are any guide, perhaps the UN would pay off our debt to the Chinese for us.
Next, I found this:
“So what's the catch? A sudden increase in the dollar price of American imports could stoke inflation in the United States. There is already some patchy evidence of an upturn in inflation. Whichever measure you use, prices are certainly rising at a faster rate now than they were two years ago, . . .”
Have you ever noticed that no matter which way an economic variable goes, someone says it is a disaster? From “patchy evidence” in either direction comes disaster. Actually, assuming prices are up faster more recently than two years ago, is this a statistically significant change? Does it make disaster really likely, sort of likely, or are we just seeing the normal random crud?
I sympathize with Ferguson’s concern over all the mortgage debt and that a lot of it is in ARMs. I think some of us are setting themselves up for hard times (there I go playing fortune teller). But, to tell you the truth, if this disaster happens, I expect to sit back and enjoy the fun. Nor do I think it will end the American Empire. I wonder. Would it be worse than the Great Depression? Now there was a real disaster, and look where we are now.
“Reason to Worry”,
along with the verbal bait
“Why you could be excused for feeling a little uneasy about the collapse in household savings, the rise in home-mortgage debt, a large and growing trade deficit and the fact that Asian countries hold so many U.S. treasuries. Go to Article”
I laughed because I am not worried about debt owed foreigners by the US. I figure if we owe somebody else something, as a country, they have to be careful of us, not the other way around.
Then I scanned the article. The writing is creative. How can you not appreciate this kind of language.
“Think of the economy of the United States as a dinosaur — one of those huge herbivores whose bulk shook the ground. A brachiosaur. A brontosaur. A diplodocus. Like them, the U.S. economy is mind-bogglingly enormous — two and a half times as big as the next largest economy in the world and almost as large as that of the six other members of the Group of Seven combined. The catch is that it has to consume almost incessantly to sustain its great heft.”
“Contrary to what we used to believe, leviathans like the diplodocus were not exactly sloths. It is now thought that they had the strength to stand on their hind legs in order to reach food at the top of trees. They may even have been able to run rather than merely plod. But it seems reasonable to assume that their reaction times were slow; it was a very long way from the diplodocus's tail to its brain. If a predator sank its fangs into that tail, it might have taken the diplodocus a few moments to feel the pain.”
“The big question about the dinosaurs is, of course, What caused their extinction? Why were so many species unable to evolve in response to environmental changes? The most common explanation is that a very sudden event, like a meteor's impact, gave the dinosaurs too little time to evolve and provided smaller and more dynamic life forms with an opportunity to take over.”
“An analogous question for economists is whether the United States is capable of evolving out of its present excessive indebtedness. Or could the global economic environment change so drastically as to threaten, if not extinction, then at least decline relative to smaller, more dynamic economies?”
No kidding, metaphor has become analysis.
Did I read right? “decline relative to smaller, more dynamic economies?” Isn’t that always going on? After all, if Microsoft goes up 1% and Widgets goes up 2%, then isn’t Microsoft declining relative to Widgets? A disaster in the making. Sheer genius.
At the bottom of the first page of the article, you see that Niall Ferguson is Laurence A. Tisch professor of history at Harvard University and the author of "Colossus: The Rise and Fall of the American Empire." Well, I guess that the American Empire will eventually fall. Probably the whole Universe, too, if I can believe Kaku. I’m just not so sure it’s as imminent as Prof. Ferguson makes out.
I continued scanning the article and found this nugget.
“As a result, there has been an immense rise in foreign ownership of American securities of all kinds, but especially government bonds. Foreign ownership of the U.S. federal debt passed the halfway mark in June 2004. About a third of corporate bonds are now in foreign hands, as is more than 13 percent of the U.S. stock market. One analyst has half-seriously calculated that at the current rate of foreign accumulation, the last U.S. Treasury held by an American will be purchased by the People's Bank of China on Feb. 9, 2012.”
Let’s see. Doesn’t this conclusion follow if the percentage of foreign owner ship of US debt increases, no matter by how little, and we forecast a continuation? Better yet, let’s do Prof. Ferguson one better and find, of all the possible period lengths ending with the most recent data, the period length with the biggest average daily increase in the percentage of foreign ownership of US debt. Let’s extend that. Maybe we can move doomsday a lot closer than 2012.
I am willing to bet Prof. Ferguson $1 million that on 1/1/2013, Some US debt will be owned by US citizens. Heck, I’ll even make it 12/31/2013.
I’m all for selling a lot more debt to the Chinese and using the proceeds to buy Chinese consumer goods. Of course, my strategy would be to default on the debt when the Chinese wise up. If third world countries are any guide, perhaps the UN would pay off our debt to the Chinese for us.
Next, I found this:
“So what's the catch? A sudden increase in the dollar price of American imports could stoke inflation in the United States. There is already some patchy evidence of an upturn in inflation. Whichever measure you use, prices are certainly rising at a faster rate now than they were two years ago, . . .”
Have you ever noticed that no matter which way an economic variable goes, someone says it is a disaster? From “patchy evidence” in either direction comes disaster. Actually, assuming prices are up faster more recently than two years ago, is this a statistically significant change? Does it make disaster really likely, sort of likely, or are we just seeing the normal random crud?
I sympathize with Ferguson’s concern over all the mortgage debt and that a lot of it is in ARMs. I think some of us are setting themselves up for hard times (there I go playing fortune teller). But, to tell you the truth, if this disaster happens, I expect to sit back and enjoy the fun. Nor do I think it will end the American Empire. I wonder. Would it be worse than the Great Depression? Now there was a real disaster, and look where we are now.
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