Thursday, April 16, 2015

Saving the Environment by Burning Trees

Eli,

I suppose this would fall under the law of unintended consequences. 

American Companies Are Shipping Millions Of Trees To Europe, And It’s A Renewable Energy Nightmare

 The expansive forests of the Carolinas, Georgia, and other nearby states have survived many human threats over the last few centuries, but the latest is one of the most unexpected. The rapid growth of Europe’s biomass industry, driven by the region’s renewable energy targets, is chipping away at southeastern forests.
Not only is there local and regional concern regarding the longevity of valuable forests, there is also evidence showing that woody biomass is actually an overall contributor to greenhouse gas (GHG) emissions, at least when viewed on a 20 or 30 year timescale. According to many scientists, that is all the time we have to start dramatically reducing emissions in order to avoid the worst impacts of climate change.

For thousands of years man moved from low density power sources to high density power sources. It's why we abandoned wood for coal during the industrial revolution. But now with policies like Renewable Energy Standards policy makers suggest we go back to the middle ages and burn wood.

Here's my favorite part of the story:
 burning wood pellets releases as much or more carbon dioxide per unit of energy than coal. 
 If environmentalists really wanted to reduce carbon emissions they would stop advocating self-defeating polices like RES and let the market work which will result in the substitution of natural gas for coal. That more than anything else will lower carbon and particulate matter.

Bill

Tuesday, April 14, 2015

Orthodontia, CEO Pay and Hillary

Eli,

The blogosphere/twitterverse is having fun with Mrs. Clinton's criticism of CEO pay.

Striking a populist note, Clinton, who announced on Sunday she was running for president in 2016, said American families were still facing financial hardship at a time “when the average CEO makes about 300 times what the average worker makes.”

The Wall Street Journal had an interesting comparison recently:
The average U.S. orthodontist earns $196,270. The average CEO makes $178,400.
Turns out anesthesiologists earn even more and and are the country's highest paid profession. I'm sure they are next on Hillary's complaint list.

Know who made even more than orthodontists and anesthesiologists?

Hillary Clinton Book Advance, $8 Million, Is Near Record
That was 14 years ago for her memoirs on being married to the President. She got $14 million for her memoir as Secretary of State. The Washington Post reports her "special University rate" for a speech is $300,000. 

I have nothing against CEO's, orthodontists,  anesthesiologists and politicians earning money. Their ability to earn high wages doesn't have any impact on my, or any else's  ability to earn a living, as far as I can tell. This whole conversation is silly.

Bill

Energy Independence

Eli,
I think US energy independence is about as important as banana independence or iPhone independence, but others place greater import on it.

The DoE released its Annual Energy Outlook 2015 today and estimates in its reference case scenario energy independence between 2025 and 2030. If energy independence is a worthy goal the DoE shows some scenarios where the US can achieve that faster and even become a next exporter:
1) Low Economic Growth
2) High Oil Price
3) High Oil and Gas Resource
Which is one of the reasons I place little import on energy independence: The US can achieve that goal by suffering through low economic growth, high oil prices and high usage. How does that help?


Sunday, April 12, 2015

How to Make the Apple Watch Boring

Ei,

My wife and I went to the Apple Store yesterday and ordered an Apple Watch for her. We saw lots of interest in the product for the hour we spent testing, wearing and talking to others about the watch. Mrs. Knabe wants the watch because she thinks it looks cool and trusts Apple and the developers will come up with productive apps for her to use.

Economists are often characterized as stodgy and boring. Doing his best to prove that true is Paul Krugman who sucks all the fun out of the Apple Watch.

Apple and the Self-Surveillance State

Bill

Reusable Bags Linked to Junk Food

Eli,

Another reason to keep using plastic bags. Plus I need to pick up after my dog.

From the Harvard Business Review:
Reusable Bags Make People Buy Organic—and Junk: An Interview with Uma Karmarkar
The research: Uma Karmarkar, an assistant professor of marketing at Harvard Business School, and her research partner Bryan Bollinger, of Duke’s Fuqua School of Business, studied the grocery bills of thousands of California shoppers. Because the receipts noted small discounts given to people who had provided their own reusable bags, it was possible to study whether their purchases differed from those of other shoppers. Comparisons showed that people who brought their own bags were more likely to buy organic goods—but were also more likely to load up on high-fat, high-calorie junk.

Bill

Monday, January 19, 2015

Liberty And Security Are a Tough Cocktail to MIx



Bill,

I don’t have a feel for where we agree/disagree on the whole NSA surveillance program .  So let me start with a series of postulates and see whether we can construct a framework within which we can operate.
The primary is function of any state should be to guarantee the safety of its citizens. This means that it must control the means of violence within that society; the police, the army, the National Guard, etc. Whether individuals or groups, promulgators of violent opposition to the society’s agreed upon organizing principles must be effectively suppressed.

You and I, as well I assume, the overwhelming majority of our 300 million countrymen and women, want to live in a society in which political power stems from the active, ongoing choices of our fellow citizens through the mechanism of democratically elected representative government, and within which basic rights of privacy, freedom of expression, and autonomy of economic and cultural choice remain  fundamental organizing principles of public and private life. We accept as true that such a society is only possible when great constraints are placed upon those whose responsibility it is to control the state’s implementation of violence. We further believe that those who job it is to control and dispatch violence under the authority of the state will accept those constraints for the simple reason that, ultimately, they want to live in the same kind of country that we do.  

Over the last 20 years or so, a series  of increasingly well financed, well organized, ruthless, international based groups have stated as their primary goal the foundation of a transnational empire constructed on religious based (or so they claim) principles of their choosing. They assert further that their ideology is based upon the word of God, and therefore incontestable.  Until recently none of these groups has achieved any functioning coherence as a nation state. Now, the Islamic State In The Levant has made substantial progress in controlling territory and population, although it remains to be seen whether its leaders are capable of, or indeed interested in, in building the sort of nation state whose economy might have the means to sustain its citizens, and the military to hold the territory it has recently conquered.  Mostly these groups have  utilized terror of an increasingly brutal nature to achieve their concomitant goal,  which is the destruction of the very organizing principles of the  free societies that we hold so dear.  With conviction, they argue that the framework of shared democratic principle and individual liberty is heretical, illegitimate,and fragile at its core. They need only to mount and sustain enough of an assault against our crucial sense of safety and security to transform our societies into police states; with the veneer of post enlightenment humanity stripped, away, they are sure we’ll be ripe for the taking.

The United Sates has found itself in this pickle more than once; from the Alien And Sedition Acts to the suspension of habeas corpus to thePalmer Raids to the mass interment of our fellow Japanese citizens, to , most recently to the torture of members of  the aforementioned groups. We even have survived 50 years of leadership of the national police agency by a man who might have fit in equally working for the Romanovs instead of Roosevelt. Inevitably, these segues into the dark side have met with unapologetic defense on one side andremorse and pledges never to allow them again on the other. Reliably, when our need to feel secure (whether we care or not we are is a separate question) outweighs our need to fee free they recur. 

Eli

What Are the Odds?



Bill,

Although they outplayed Seattle for 58 minutes, the Green Bay Packers lost the NFC championship yesterday. In the post mortem analysis (and it really must feel like an autopsy to the Packers and their fans),  four decision points stand out to this observer.

Twice within the 1st quarter, the Packers chose to accept a field goal attempt for the Seattle 1 yard line.  The success rate for conversion attempts under this circumstance is 53%.

Trailing 16-0 late in the 3rd quarter, the Seahawks executed a fake field goal from the 19 yard line for a touchdown. Statistics on such opportunities are harder to come by since they are much rarer, but best estimates are a success rate, also, of around 50%

With just a few minutes left in the game, the Packers failed to cover an onside kick that everyone in the football watching world knew was coming. In the NFL overall, onside kicks enjoy a 26% success rate.
Thus, the Packer failed to seize 2 opportunities with a 50% success rate, and failed to defend against 2 other opportunities that the Seahawks chose to seize, with an average success rate of 35%. The potential reward for success from any of these 4 decision points needs no further elaboration.

If Mike McCarthy were a hedge fund manager, my guess is he would be looking a new job this morning.

My beloved Patriots may lose the Super Bowl in 2 weeks, but I doubt it will be due to this kind miscalculation of risk and reward on Bill Belichik’s part.
Eli