Monday Message Board

Back again with another Monday Message Board.

Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link


http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page

12 thoughts on “Monday Message Board

  1. JQ, can you weave bliss into the future please…”Bliss after a finite time”.

    Frank Ramsey’s A Mathematical Theory of Saving
    … (‘we can see that the community must save enough either to reach Bliss after a finite time, or at least to approximate to it indefinitely. For in this way alone is it possible to make the amount by which enjoyment falls short of bliss summed throughout time a finite quantity’. p. 545 )…
    https://onlinelibrary.wiley.com/doi/full/10.1111/ecoj.12229
    – Frank Ramsey.

    “The Man Who Thought Too Fast
    “John Maynard Keynes was one of several Cambridge economists who deferred to the undergraduate Ramsey’s judgment and intellectual prowess.

    “When Ramsey later published a paper about rates of saving, Keynes called it “one of the most remarkable contributions to mathematical economics ever made.” Its most controversial idea was that the well-being of future generations should be given the same weight as that of the present one. Discounting the interests of future people, Ramsey wrote, is “ethically indefensible and arises merely from the weakness of the imagination.” In the wake of the Great Depression, economists had more pressing concerns; only decades later did the paper’s enormous impact arrive. And so it went with most of Ramsey’s work. His contribution to pure mathematics was tucked away inside a paper on something else. It consisted of two theorems that he used to investigate the procedures for determining the validity of logical formulas. More than forty years after they were published, these two tools became the basis of a branch of mathematics known as Ramsey theory, which analyzes order and disorder. (As an Oxford mathematician, Martin Gould, has explained, Ramsey theory tells us, for instance, that among any six users of Facebook there will always be either a trio of mutual friends or a trio in which none are friends.)
    https://www.newyorker.com/magazine/2020/05/04/the-man-who-thought-too-fast

    Serendipity links…
    “Stern Review
    Arrow analysed the Stern Review’s conclusions by looking at the Review’s central estimate of GHG stabilisation costs of 1% GNP, and high-end climate damages of 20% GNP (Arrow, 2007a, pp. 4–5). As part of the Ramsay formula for the social discount rate, Arrow chose a value of 2 for the marginal elasticity of utility, while in the Review, Stern chose a value of 1. According to Arrow, Stern’s recommended stabilisation target passes a cost-benefit test even when considerably higher PTP-rate (up to around 8%) than Stern’s (0.1%) is used. Arrow acknowledged that his argument depended on Stern’s stabilisation central cost estimate being correct.”

    “According to Quiggin, the difference between the two is determined by the equity premium.[10] Quiggin says that there is no generally accepted theory accounting for the observed magnitude of the equity premium and hence no easy way of determining which approach, if either, should be regarded as the appropriate market comparator.”
    https://en.wikipedia.org/wiki/Stern_Review

    Quiggin, John (20 December 2006). unpublished paper. JohnQuiggin.com. Archived from 
    https://johnquiggin.com/2006/12/27/sensitivity-analysis/

    https://johnquiggin.com/2006/12/19/reviewing-the-stern-review-again/

    https://johnquiggin.com/2006/12/09/the-equity-premium-and-the-stern-review/

    https://johnquiggin.com/2006/12/06/close-to-zero/

  2. It’s a fascinating debate, even though most of it is beyond me. What has changed is that nice calculations of the net cost of the energy transition, and debates over the proper social discount rate, have become practically irrelevant. The IPCC 5th report found already in 2014 that the net GDP costs of the transition are nil or as near as makes so difference. Renewable costs have crashed since, and the massive health GDP costs of fossil fuel pollution, and the economic damage from climate inaction, have increasingly been recognized. The free lunch conclusion ( https://www.samefacts.com/the-25-trillion-free-lunch-of-the-dwarfs/ is no longer sensitive to details.

    We do face two major problems of a different type. The lesser is the time-shifting and front-loading of the needed investment. The cash savings come a decade or 15 years later, as renewables once built cost next to nothing to run. The larger is one of political economy: defeating the massive lobbying and agitprop effort of the dying fossil fuel interests. In addition, there has to be generous compensation and conversion aid for the displaced workers. Are they more deserving than other displaced workers by structural changes? No, but the kludge is politically vital to counter the agitprop.

  3. Labor’s Kristina Keneally slammed for linking immigration to unemployment
    https://thenewdaily.com.au/finance/finance-news/2020/05/03/kristina-keneally-immigration/

    …That’s a strong argument that doesn’t get the airing it should,” Dr Quiggin said, adding that tourists clogged up roads but no one was pushing to slam the brakes on tourism.“When you look at the arguments [against immigration], most of them aren’t very well thought through.”

    Tourists clog up more than roads. Given that many tourists travel in company – families, friends, and much larger groupings – their contribution to clogged roads may be the least of it.

    Prof Quiggin, obviously TND space was limited but of the numerous arguments against what has been up to now ponzi sky-high rates of immigration you raised only this less than half-baked argument and similarly an argument concerning immigration and jobs that the Productivity Commission, for one, has long consitently debunked with their findings that benefits of immigrant labour overwhelmingly flow to immigrant labour and capital to the cost of incumbent labour.

    “When you look at the arguments [against immigration], most of them aren’t very well thought through.”

    Well, if ever you feel the time is right* first you have to look! And then perhaps argue the merits not straw men!

    *

    John Quiggin says:
    April 8, 2019 at 3:37 pm
    Enough on the migration issue. It has derailed the thread.

    Svante says:
    April 8, 2019 at 3:55 pm
    Prof Quiggin, again shutting the issue down? With the greatest respect, may I ask whether perhaps it is about time then for a posting on such an issue of great national economic import both now and for the future, eg:
    https://foreignpolicy.com/2018/10/03/australia-the-worlds-first-immigration-economy/

    John Quiggin says:
    April 8, 2019 at 4:09 pm
    Thanks, Svante, I’ll write about this when I feel the time is right. In the meantime, as it seems to be an idee fixe for you, further comments belong in the sandpit.

    https://johnquiggin.com/2019/04/06/the-average-median-worker-does-not-earn-the-arithmetic-average-wage/#comment-208532

  4. “can you weave bliss into the future please”

    You’re referring to the Kiwi philosophers recent work on that topic?

    Drink yourself more bliss
    Have a stiff one all night
    Everything is alright

    Try and reach the bar
    Coppers took the car
    Offers from the sidewalk

    [Chorus]
    Drink yourself more bliss
    Forget about the last one
    Get yourself another

  5. James Wimberley,

    We have had a news report here in Australia which highlighted a technical report on the massive fresh water costs of fossil fuel energy generation (coal power stations) in Australia. IIRC correctly it was to the effect that coal station power generation for our cities uses as much fresh water as the cities themselves use directly. I assume the latter means at least domestic and commercial water use and maybe even light industrial use as well.

    For a nation with serious fresh water supply issues for agriculture, cities and environmental flows, this indicates another enormous benefit to us of getting rid of coal power stations.

  6. The Environmental Protection Authority in Western Australia has recommended approval of the huge Energy Hub project near Pilbara. https://reneweconomy.com.au/massive-pilbara-wind-and-solar-export-hub-gets-environmental-green-light-67907/

    Much still isn’t clear. Will it be 9 GW or 15 GW? The plan is to export much of the energy prodced ny a combination of wind and solar farms to Asian markets, but will it be by subsea cable to Indonesia or tankers full of hydrogen or ammonia to Japan? The latter depends on much lower future prices for bulk catalysis, quite likely but not a sure thing. Nor is suspending a 3 GW HVDC cable over the 3,000-metre deep Timor Trench.

    The Aboriginal people owning this desert land are on board, and the EPA is fretting over removal of vegetation, so the change in land use looks acceptable.

  7. James, these schemes are very odd as I’ve never seen an explanation of how they’ll make money. I’d believe nothing until the interconnector starts to be built. (Which will run along the ocean bottom unless they have gotten a lot more confident about floating cables. Maybe they’ll become more confident for this job?)

  8. Remember my complaint to the local adminstration they ignored i was ranting about. I got an answer now.What was i writing: Our local cemetary has a big entrance gate. The cemetary is open 24h a day, so one could just keep the door fixed open. That way no one has to touch the doorhandle right? People always close it behind them when they enter the cemetry. Now i got an answer: Apperently it would “disturb the peace of the place” to keep the door open which can not happen under any circumstances. Thus one has to rely on the individual responsibility of everyone to use gloves or tissues. Not kidding. That was the answer.

    I couldnt resist to suggest that there is a little contagion externality involved which makes the individual responsabilty answer kind of idiotic and that empirical reality of gate opening does not match their theoretical picture of the ideal responsible gate opener.

  9. Run baby run. Bipolar and seven -7! –  bananas!

    The Man Who Runs 365 Marathons a Year

    I first discovered Shattuck while scrolling through Strava in July 2019. At the time, he was averaging around 250 miles per week. His bio on the platform read: “Correr es vivir”—to run is to live—words attributed to Caballo Blanco of Born to Run. What kind of person runs a marathon, or farther, every single day? I wondered. And how is that even possible? 

    …he heads to the kitchen to down a half-cup of coffee and make a smoothie with seven bananas, two servings of PlantFusion Complete Protein, cinnamon, and water,…

    https://www.outsideonline.com/2412303/mike-shattuck-running-bipolar

  10. The plan of some members of the US Democratic Party to give every American Adult 2000 dollars per month plus more for children while the plandemocraatic problems last is quite an interesint twist in this developing story. This is a really audacious plan. What would happen if every country started to give every citizen of their country lead to every person on earth getting an equivelent amount of US dollars in local currency? What is going to happen if only the US government does this?
    My mind must be playing tricks on me. I thought that this was a site for lay economists. I have not been seeing something that I should see. >>>>>>><.

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