If I can overcome the jet lag that’s causing me to scramble names in my posts, and generally to operate in something of a fog, I’ll be back to normal blogging this week. To start the week off in the traditional fashion, it’s time for Monday Message Board, where you can post your comments on any topic (civilised discussion and no coarse language, please).
DDT
Ken Parish gives a generally approving link to a piece of junk science claiming that bans on DDT inspired by Rachel Carson’s Silent Spring have caused the deaths of millions of third world residents. He also gives a link to a more balanced piece which gives cautious support to limited use of DDT in anti-malaria campaigns in poor countries (the only use that is currently legal, although there is widespread illegal use as an agricultural insecticide). While noting that not all of Carson’s 1962 claims about the dangers of DDT have stood up to subsequent scrutiny, the author dismisses right-wing conspiracy theories like those in the first link, and makes the point that Carson was campaigning against the use of DDT as a broad-spectrum insecticide, not as an anti-malarial. As the author notes
Soaking the biota in DDT like it was bubble bath, standard practice at the time Silent Spring was written, was a bad thing and Carson was right to condemn it.
As this piece makes clear, the main reason for the abandonment of DDT as the core component in anti-malaria campaigns was the growth of resistance, which was of course exacerbated by indiscriminate use. The ban on DDT use in developed countries, to the extent it had any effect, slowed the general rise of resistant species, and therefore increased the effectiveness of DDT in its anti-malarial use.
The main advantage of DDT is that it is cheap and persistent. Persistence is also one of the main disadvantages, along with broad-spectrum effects. For poor countries, and for the specific purpose of anti-malaria campaigns, the benefits arguably outweigh the costs, and this is why DDT continues to be used in these countries.
The question of when the extra cost of alternative pesticides is sufficiently small to justify abandoning DDT, or sufficiently large to justify readopting it in countries that have abandoned it, is an important one that needs careful analysis. The cause of rational debate is not assisted by propaganda pieces like the one Ken cited.
Note This version has been edited in response to points made by Ken in the comments thread.
What I'm reading
The Wealth of Man by Peter Jay. Among other claims to fame, Jay was one of the writers of Yes, Minister and this book has both the strengths and weaknesses of the series.** In essence, it’s a public choice view of the world. This is conducive to telling a convincing story, as long as you don’t worry too much about what’s being left out. In Jay’s story, private initiative is the key to progress and governments are at there best when they keep in the background setting the rules, and defending producers against internal and external predators.
To tell the story this way, you have to leave out some pretty important chapters, or, as in Jay’s case, report them and disregard. While reading about the Mesopotamian civilisations based on gigantic irrigation systems and the Roman road system that enabled rapid communication from Scotland to Syria, I was waiting for some sort of discussion of public goods, but this is not a category for Jay.
In fact, it would be quite plausible, though a drastic oversimplification, to tell a story in which the main engine of progress is the appropriate choice of public goods. Military grandeur, monarchical display and religious edifices like pyramids and cathedrals soak up capital, while schools and transport infrastructure generate high returns. In 18th century England, even the allocation to religion was turned to good account with clergymen like Priestley and Stone discovering oxygen and aspirin instead of writing devotional tracts.
I also read and very much enjoyed Isabel Allende’s memoir of Chile My Invented Country.
**A totally erroneous claim. As James Wright Russell points out, it was Antony Jay. What’s annoying here is that I had doubts about my recollection on this, and relied on Google, which produced this link, referring to “co-writers Jonathan Lynn and Peter Jayâs 1980-1982 series Yes Minister, said to be the favourite series of then Prime Minister, Margaret Thatcher. ” What’s really annoying is that I have a DVD of the series, so I could easily have done a more reliable check.
Working more and enjoying it less?
This piece from the Economist covers some of the same points I’ve been making about work intensity (here and here. The summary is that the UK and France have approximately equal GDP per person. French output per hour is 20 per cent higher than British, but this is cancelled out by higher British employment rates and higher average hours per person.
I’ve argued in the past, that improvements in GDP achieved by longer hours and greater work intensity are largely illusory and the Economist largely goes along with this. On the other hand, higher employment rates are generally a positive way to achieve higher output, at least if the alternative is unemployment, rather than, for example, participation in full-time education.
A very similar analysis applies to the US, except that US productivity is about equal to that in France and other European countries, so higher employment rates and longer hours translate into higher GDP per person.
A final point is that the greater inequality in the US and the UK imply that the average (median) person falls further short of average (mean) income than in Europe.
Back in Oz
Hi everybody, I’m back in Oz today and back blogging. Before I settle back in, I’ll give my impressions of Montreal. In economic terms, it was hard to figure out. On the one hand there were lots of fairly derelict-looking buildings and many not-so-derelict ones had “A Louer” (“To Let”) signs. On the other hand, there was new construction going on all over the place. Similarly, while there was a general air of prosperity, particular in the CBD, beggars and homeless people were considerably more evident than in DC. I’m not clear whether this is reflects a dual economy, or the early stages of recovery from a prolonged slump, or just the hazards of the random snapshot approach.
The city is overwhelmingly francophone and has apparently become significantly more so in recent decades owing to the language policies of the Parti Quebecois. However, at least in shops and so on, everyone switched to fluent English as soon as they’d heard a sample of my French.
The efficient markets hypothesis goes berserk
Keneth Miles, Brad de Long and a lot of slashdotters have been all over this report that the Pentagon was on the verge of setting up a futures market in terror attacks.
Apparently, the genius behind this idea is Admiral Poindexter of Iran-contra fame.
Leaving aside the obvious points about moral hazard and insider trading that have already been made, I’m impressed that the most magical version of the efficient markets hypothesis, in which markets can divine the future better than any individual, still holds sway in Washington in the wake of the bubble. Perhaps these guys have been in some sort of bunker since 1999. I wouldn’t be surprised to learn that they planned to run the thing over the Internet, have an IPO and use the billions of dollars they made to fund the Defense budget.
Oil and Economics
The issue of oil is still coming up as one of the issues regarding the war in Iraq, and US relations with the Middle East more generally. To get a bit of perspective on this it’s useful to look at some numbers. Currently world oil production is about 80 million barrels each day, of which the US consumes about 20 million. This is about a third of total energy consumption. (a useful conversion factor, if I have it right is that a million barrels of oil yields about 5 terajoules of energy, which is about the output of 10 1000MW power plants).
Saudi Arabia typically produces about 8 million barrels per day, but has the flexibility to range between about 6 and 10. Prewar Iraq was producing around 3 million barrels per day. An optimistic outlook is that a functional government there could produce up to 6 million barrels per day.
There are various ways of looking at this, which I’ll discuss, but a convenient starting point is to focus on a change of 3 million barrels a day in the supply-demand balance. This is the amount of extra Iraqi oil in the optimistic scenario, and was the amount that Saddam could have cut off at short notice if he’d been left in place and in unfettered control of Iraqi oil. It’s also a pretty good measure of Saudi capacity to swing the oil market around.
3 million barrels a day is equal to 15 per cent of US oil consumption and about 5 per cent of US energy consumption. Over the short run, say a year, it would be easy to meet such a shortfall by drawing on stocks (including the ‘strategic reserve’) and by modest rationing measures like ‘odds and evens’. To look at the longer-term economic impact, it’s best to think what tax change would be required to yield this kind of reduction in use. I’ll assume the medium-term elasticity of demand for oil products is about 0.5, which implies that a 30 per cent tax would be needed. Some more rough calculations, available on request, suggest that the economic welfare cost of such a tax would be around $10 billion per year. (This assumes that the price is right to start with. It seems more likely that gasoline is undertaxed in the US, relative to the social costs of car use, and that a tax would be welfare-improving.)
Clearly the cost of domestic action to reduce US oil demand by 3 million barrels a day is a lot less than the cost of the Iraq war (amortised over any plausible time span) or the continuing cost of an expanded military.
The upshot of all this is that any* analysis of the war that places heavy weight on the role of oil implies that the US has adopted a policy adverse to its own interests. This could be because the Administration doesn’t understand the issues, because it thinks a war would be more popular than a petrol tax or because it is acting at the behest of oil industry interest groups. Alternatively, it might be better to conclude that oil (Iraqi or Saudi) was not one of the primary motives for war.
* I leave aside the idea that Iraq is supposed to serve as a springboard for an invasion of Saudi Arabia. If the US wanted to invade Saudi Arabia, it could do so easily, with no need for a springboard, and 9/11 provided the best pretext that’s ever likely to arise.
Monday Message Board
I’m on the move again, to Montreal, so I don’t know when I’ll next be able to post. In the meantime, there’s the home-made fun and entertainment of the Monday Message Board. Post your views on any topic (civilised discussion and no coarse language, please!).
Suggested discussion starter: Collective blogs – is the whole more than the sum of its parts?
What I'm reading, and more
The Paradox of American Democracy: Elites, Special Interests, and the Betrayal of Public Trust by John Judis. This book was published in 2000, but the analysis is still relevant. What’s interesting, particularly from an Australian perspective, is that the book is not, as might be expected, a diatribe against elites and interest groups. Judis argues that the American system relies on participation by interest groups representing real constituencies and by disinterested elite groups – his models are the Brookings Institution and the Committee on Economic Development.
But now, Judis says, most interest groups have no real members, and are merely “letterhead groups” relying either on business lobbies or direct mail appeals for their funding, while the elites have capitulated to business. The result is a corrupt, money-driven system of politics.
The bad guys in the book are the lobbying industry (“K Street”, in the intra-Beltway jargon) and members of the elite who act as mouthpieces for partisan interests – the prime individual example is Henry Kissinger, and the main institutional villain is the American Enterprise Institute. Having never looked into the history of the Institute, I’ve accepted Brad de Long’s judgement that it was once a reputable, if conservatively-inclined outfit. By Judis’ account, though, it was always a front group for partisan conservatives, and so, its recent activities (discussed here, here and here) can be seen merely as revealing its true colours.
Judis’ analysis is quite US-specific, but it is still helpful in trying to work out an appropriate response to the Australian debate over “elites” most of which is at a very low level.
Spooky, or what?
I’ve previously mentioned my blogtwin relationship with Tim Dunlop. Not only do Tim and I have the same views on a lot of issues, but we often think of the same posts, to the point where, if I have a good idea, I try to check that Tim hasn’t already posted it.
With my visit to the DC area, the link seems to get even closer. I had a very enjoyable dinner with Tim and his family and (as is fairly typical of me) left my glasses at his house. Next morning, Tim noticed the glasses and I noticed their absence. The problem arising immediately was to pick the appropriately civilised time to call and arrange a return. Tim and I chose exactly the same time, with the result that he got an answering machine and I got a busy signal. Fortunately, it was all cleared up and I can see clearly now. But I can’t help worrying that the blogosphere is generating some sort of obscure psychic network here.
John Quiggin 