I Love Bill Clinton’s Honesty

Bill Clinton doesn’t have a reputation for forthrightness and truth telling, but at least he is being forthright about the economic consequences of greenhouse gas reductions:

“And maybe America, and Europe, and Japan, and Canada — the rich counties — would say, ‘OK, we just have to slow down our economy and cut back our greenhouse gas emissions ’cause we have to save the planet for our grandchildren.’ We could do that.

I don’t know of any other politicians that have been this honest. The forced reduction of greenhouse gases will impose a serious contraction on the economy. I’m glad Bill Clinton is honest about it.

Writers’ Strike Lauches Novelist’s Career–In 1960

In 1953, a Brit named Charles Edmund Dumaresq Clavell moved to Hollywood and became a screenwriter. His first film was The Fly in 1958 (the same story was remade by David Cronenberg in 1986). In 1960, the writers’ strike put his screenwriting career on hold.  But Clavell didn’t stop writing, instead he wrote a novel–King Rat. King Rat was a fictionalized account of his experiences as a POW in Changi Prison during World War II. This was the first novel that launched the book-writing career of James Clavell.

I hope other writers can writ their first big novel during the current writer’s strike. Apparently many of them are working on it.

Appropos of Nothing–the Dolomites

Crystal Peak, originally uploaded by Anna Pagnacco.

Bill Gates Doesn’t Understand Why He’s So Rich

It’s too bad that Bill Gates doesn’t understand that one of the main reasons he is a billionaire is because of the legal and property rights systems in the first world countries. He claims he wants to help the world’s poor, but first he should understand why he was able to grow so rich.

At the World Economic Forum meetings in Davos, Switzerland, Gates called for “creative capitalism” to help the poor. It isn’t exactly clear what Gates intends, but as Declan McCullagh of CNET writes, it “seems to center around companies spending money (or taking on money-losing projects) that are seen as socially desirable. To Gates, it’s ‘market-based social change’ that amounts to ‘doing work that eases the world’s inequities.’”

Charitable efforts should be applauded, but if Gates really wanted to help the world’s poor, he would need to better understand capitalism and why some countries stay poor. McCullagh continues:

What’s a little disappointing is that Gates missed the opportunity to make a crucial point: that the reason poor countries remain poor and their citizens can’t afford life-saving drugs is not that they receive insufficient charity on the part of wealthy nations.

The reason is that governments in the poorest countries are corrupt, nondemocratic, and repressive. Property rights are not secure, denying would-be entrepreneurs the chance to take out loans against their homes to raise capital. Court systems are nonfunctional, limiting individuals’ ability to enter into contracts with one another. Foreign aid is diverted by corrupt officials to Swiss bank accounts (in sub-Saharan Africa alone, the amount diverted was $150 billion in 2005). Food aid depresses prices, undercutting local farmers.

Those reasons, not “noncreative capitalism,” tend to be the root causes of poverty and misery in those unlucky nations. Adam Smith, the father of modern capitalism, figured this out more than 200 years ago when he wrote: “By pursuing his own interest, (a businessman) frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

A better quote from Adam Smith is this one from An Inquiry into the Nature and Causes of the Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” (Book 1 Chapter 2).

Poor countries don’t need “creative capitalism.” There is plenty of creativity in these unlucky countries waiting to be unleashed. What is needed is decent government and institutions that let the butcher, the brewer, or the baker flourish. As Hernando de Soto (“The world’s greatest living economist” according to Bill Clinton) writes in The Mystery of Capital, the world’s poor already have capital. The total assets of the poor in Haiti, for example, are 150 times greater than all the foreign investment received by Haiti since 1804. The poor, however, lack the ability to sell or trade their assets legally because the property and legal system in the poor countries discriminate against the poor.

Poor people need the same type of property and legal institutions that allowed Bill Gates to get rich in the United States. In The Mystery of Capital de Soto include this about Bill Gates:

How many software innovations could he have made without patents to protect them? How many deals and long-term projects could he have carried out without enforceable contracts? How many risks could he have taken at the beginning without limited liability systems an insurance policies? How much capital could he have accumulated without property records in which to fix and store that capital? How many resources could he have pooled without fungible property representations? How many other people would he have made millionaires without being able to distribute stock options? How many economies of scale could he have benefited from if he had to operate on the basis of dispersed cottage industries that could not be combined? How would he pass on the rights to his empire to his children and colleagues without hereditary succession? [p. 224]

I don’t know who has Bill Gates’ ear, but I wish Hernando de Soto did. To really help the poor of the world, the poor need governments that don’t steal from them and good property and legal system.

Creative capitalism is fine. Isn’t going to solve the problems of the world’s poor. All creative capitalism really will do is make rich philanthropists feel better about themselves.

Glenn Reynolds Likes the Eee PC

Instapundit, recently reviewed the the Sony UX490 and the the Nokia N810. He concluded that neither was on the mark for a go-anywhere PC. He preferred the $499 Nokia to the $2000 Sony, but you neither has a real keyboard and is therefore pretty limited. At the time, I thought about writing him an email saying that he should check out the Eee Pc, but I realized that many people would have done the same thing.   

Glenn bought himself an Eee PC and he really likes it.  He writes, “Is it perfect? No. But for $399 it’s pretty close.” 

Jérôme Kerviel, world hero

How can you not love the French? Apparently some people are fans of Jérôme Kerviel and his epic financial fraud. I’m not a fan, but you have to admire his ability to defraud.

Here’s Kerviel’s resume, in French of course:

Bill Gates Hates Capitalism

Last week Bill Gates complained that he’s grown impatient with the shortcomings of capitalism. Professor Bainbridge goes ones step further and explains that Bill Gates hates capitalism:

But when did Bill Gates ever believe in capitalism? He’s an inveterate monopolist and has been since the beginning. Monopolists hate real capitalism, precisely because they hate competition. Monopolists love corporate social responsibility because it creates barriers to entry. So of course Bill Gates is going to turn “a cold shoulder to the blessings capitalism bestows.”

Bainbridge also argues that Gates may support mandating “social responsibility” because it creates barriers to entries to competitors. While in other cases, this might be in the case, but in Gates’ case, I doubt it. The two biggest competitors to Microsoft are Apple and linux. Both are arguably more “socially responsible” than Microsoft.

Do Carbon Offsets Reduce Carbon Emissions?

When celebrities who raise the alarm about global warming fly around the world on private jets, or use proflagate amounts of energy, they justify their carbon emissions by stating that they buy carbon offsets. The problem is that carbon offsets might not offset much carbon emissions. The Washington Post has a very interesting story about the U.S. House of Representatives’ efforts to reduce emissions through carbon offsets.

The House of Representatives has presumably learned that money cannot buy love or happiness. Now, it turns out it’s not a sure solution to climate guilt, either.

In November, the Democratic-led House spent about $89,000 on so-called carbon offsets. This purchase was supposed to cancel out greenhouse-gas emissions from House buildings — including half of the U.S. Capitol — by triggering an equal reduction in emissions elsewhere.

Some of the money went to farmers in North Dakota, for tilling practices that keep carbon buried in the soil. But some farmers were already doing this, for other reasons, before the House paid a cent.

Other funds went to Iowa, where a power plant had been temporarily rejiggered to burn more cleanly. But that test project had ended more than a year before the money arrived.

The House’s purchase provides a view into the confusing world of carbon offsets, a newly popular commodity with few rules. Analysts say some offsets really do cause new reductions in pollution. But others seem to change very little.

To environmentalists, the House’s experience is a powerful lesson about a market where pure intentions can produce murky results.

“It didn’t change much behavior that wasn’t going to happen anyway,” said Joseph Romm, a senior fellow at the Center for American Progress who writes a blog calling for more aggressive action on climate change. “It just, I think, demonstrated why offsets are controversial and possibly pointless. . . . This is a waste of taxpayer money.”

These results are typical of many government programs. It is sad to waste resources on activities that people would have engaged in anyway.

The real point is this–good intentions do no lead to good outcomes. Global warming policy needs to be rooted in actual positive outcomes, not merely good intentions.

Is climatology a pseudoscience?

William Briggs, a statistician, has written a provocatively titled post “Is climatology a pseudoscience.” Is answer is no, but his essay should not comfort many climatologists:

Now put yourself in the place of a climatologist, one of the many hundreds, in fact, who was involved with the IPCC and so shared in that great validator, the Nobel Peace Prize*. You have spent a career devoted to showing that mankind, through various forms of naughtiness, has significantly influenced the climate, and has caused temperatures to grow out of control. Your team, at a major university, has built and contributed to various global climate models. Graduate students have worked on these models. Team members have traveled the world and lectured on their results. Many, many papers were written about their output, and so forth.

But something has gone wrong. The actual temperature, predicted to go up and up, has not cooperated and has instead stayed the same and even has gone down. What do to? Let’s take a “What would a scientist do” quiz and find out.

Your model has predicted that temperatures will go up because CO2 has, but unfortunately temperatures have gone down. Do you:

1. Abandon the model and seek a new career
2. Discover where the model went wrong; publish results admitting why and how you were wrong
3. Sit and wait: after all, the temperature is bound to increase sooner or later, hence validating your model
4. Believe that the model cannot be wrong, else so many people wouldn’t believe it, and so posit some new source that is “holding back” warming, and only if that new source weren’t there, your model would be perfect.

The problem is that too many climatologists choose #4.

Has anybody gone for answer (4)? Yes. Already we are seeing papers—peer-reviewed, to be sure—that posit sources that are “masking” the true warming. So far, these papers are concentrate on aerosols, which are particles, caused by mankind naturally, that can, through various mechanisms, block incoming solar radiation and lead to cooling. Aerosol cooling only gets you so far, however, because aerosols are heavy, short-lived particles whose effects are actually easy to measure. So if models continue to over-predict, even after accounting for aerosols, some other source that “masks true warming” will have to be found.

It’s too bad that many climatologist don’t work more on #2.

Website of the Day

Run don’t walk over to Liberty Underground of Virginia.  It is a website not to be missed.