Russil Wvong

Simple pro forma for a multiplex

2023-02-20T00:00:00-08:00

A "pro forma" is basically a business case, showing whether a housing project is economically viable or not. The basic idea is that land value is the expected selling price of the new building, minus all the costs of building it. If the land value is significantly greater than the current value of the property with its existing building, then the landowner will be willing to consider selling the property to a builder, or hiring a builder and redeveloping it themselves.

This interactive spreadsheet (created with Jspreadsheet CE v4) is an extremely simple pro forma which illustrates some key assumptions:

Total floor space
Selling price per square foot
Total cost to build per square foot
How much the landowner wants before considering redevelopment

Even small changes to the assumed selling price or costs will have a major impact on the economic viability of the project. So it's important to have room to accommodate these changes.

Vancouver: we need more apartment buildings

2021-08-08T00:00:00-07:00

[Update: I've set up a separate blog, morehousing.ca, to talk specifically about the need for more housing in Metro Vancouver. Housing being so maddeningly scarce and expensive is making pretty much everyone worse off.]

The City of Vancouver is proposing to make six-storey rental apartment buildings legal in C-2 zones, shown in pink on the map. This is a good idea.

Summary

We have a major shortage of rental housing across Metro Vancouver. There’s a mismatch between jobs and housing, and that’s driving up rents.

We have limited land, but there’s nothing stopping us from building more rental apartment buildings. The more floors you have, the less land you need for each apartment.

Vancouver has a lot of new condos and not many new rentals. New rentals help a lot: they’re more secure than renting a condo, renting is much cheaper than owning, and even when rents are high they lower rents elsewhere in the neighbourhood (via “vacancy chains”).

In general, people dislike change. People who live in Vancouver like their neighbourhoods the way they are. But if you ask everyone, most people support four- or six-storey apartment buildings in residential neighbourhoods.

In the city of Vancouver, council approves rental buildings one at a time. It almost always says yes, but it’s very slow. It makes sense for council to make the decision up front.

Background

Metro Vancouver has a shortage of rentals, causing an affordability crisis

This may seem obvious, but not everyone agrees. How do we know?

In BC, rents are subject to rent control: each year, your landlord can only raise your rent by inflation plus 2% (recently reduced to inflation plus 0%). But market rents - what you have to pay if you’re looking for a new place, when you’re competing over a limited number of available rentals with everyone else who wants to live here, and you’re all bidding up rents - are 20% higher than that.

The reason people move here, both Canadians and immigrants, is that there’s lots of jobs in Vancouver. (In comparison, Calgary has plenty of housing, and housing costs are much lower, but it’s harder to find a job.)

The housing shortage is bad

Because market rents are high, if you ever have to find a new place (e.g. your landlord sells), you’re in a very precarious position. Who can afford to suddenly pay 20% more for rent? For many people in this situation, they simply can’t afford to live in Vancouver - they’re basically pushed out.

Higher rents mean lower real incomes and savings, employers can't find workers, people get pushed out of the city - for anyone who isn't already a homeowner, it's a bad situation all around. Even for homeowners it's bad: they're okay, but where are their children going to live? If hospitals can't hire nurses and doctors, what's going to happen to the health-care system?

Do more vacancies actually reduce rents?

When there’s lots of vacancies, landlords need to bid down rents in order to attract tenants.

Some recent evidence from Apartment List:

New rentals help even when they’re expensive. Whenever a new rental building opens up, high-income renters move there from the surrounding neighbourhood. This creates more vacancies in the older, cheaper rental housing, which drives down their rents.

Matthew Yglesias rounds up some empirical studies:

Kate Pennington’s recent study of San Francisco is very precise: “I find that rents fall by 2% for parcels within 100m of new construction. Renters’ risk of being displaced to a lower-income neighborhood falls by 17%. Both effects decay linearly to zero within 1.5km.”
Xiaodi Li looked at New York: “For every 10% increase in the housing stock, rents decrease 1% and sales prices also decrease within 500 feet.”
Brian Asquith, Evan Mast, and Davin Reed look specifically at new market-rate housing in low-income neighborhoods in eleven cities and find: “New buildings decrease nearby rents by 5 to 7 percent relative to locations slightly farther away or developed later, and they increase in-migration from low-income areas.”

A study from Germany: a 1% increase in housing completions reduces rents between 0.4% and 0.7%.

Most people support apartment buildings in residential neighbourhoods

Public support is surprisingly high. When Burnaby ran a workshop with randomly selected residents, 70% supported four- and six-storey apartment buildings in residential neighbourhoods. A poll in Vancouver found similar results.

The reason this is surprising is that whenever there’s a public hearing on a rental building there’s always vocal opposition, but of course the people who attend public hearings are not going to be representative. Typically they’re the people who are most worried about change to the neighbourhood, often homeowners who are understandably fearful of anything that could lower the value of their properties (their biggest asset).

People are also concerned about public services, like transit and schools, being overloaded. As we get more people living in a neighbourhood, we also need to build up services.

Council almost always says yes in the end

But not always. A landowner in Shaughnessy proposed building rental townhouses, and council rejected it. Three years later, they’re trying again.

Another notable vote: the proposal to build a tower at Broadway and Birch, on the site of a former Denny’s. This only passed narrowly, with a 6-5 vote.

There seems to be some confusion between cause and effect, with progressive opponents of new housing saying that new rentals are driving up rents. It’s the other way around: when rents are high, people want to build new housing. New housing isn’t the disease, it’s the cure.

On the right, there’s an argument that high land values are what makes housing expensive, so the city shouldn’t be rezoning for higher density and thus increasing land values. Again, this is confusing cause and effect. Land value is how much a developer is willing to pay for land, which is what’s left over ("residual") after you take the selling price and subtract construction costs, profit, and the cost of getting approvals. In other words, high housing prices are what’s driving up land values.

What happens next

Legalizing six-storey apartment buildings in C-2 zones is one part of the Streamlining Rental proposal. A vote is expected in September 2021.

The map is from page 1 of this city presentation. The new process - requiring development permits rather than rezoning, shortening development time by about a year (!) - is described on page 7.

There's 11 votes on council. The four swing votes are Michael Wiebe (Green), Pete Fry (Green), Rebecca Bligh (former NPA), and Sarah Kirby-Yung (former NPA).

The four consistent Yes votes are Kennedy Stewart, Christine Boyle (OneCity), Lisa Dominato (former NPA), and Melissa De Genova (NPA).

The three consistent No votes are Colleen Hardwick (former NPA), Jean Swanson (COPE), and Adrianne Carr (Green).

The overheated housing market: We've seen this movie before

2021-07-11T00:00:00-07:00

We can see what's going to happen to Canadian house prices - we saw the US housing market crash. We just don't know when.

Economist Robert Shiller has US house price data going back to 1890. After you subtract inflation, over the long term prices are basically flat, with some spectacular rises and falls along the way. Why? Buildings age and become dated, so their value declines over time; it's the land that's important, and the US is not running out of land. If land becomes super-expensive in a particular city, there's a safety valve: people can move to smaller cities (as we're seeing now in Canada).

This suggests that what we're seeing in the overheated Canadian real estate market - especially in the GTA and Metro Vancouver, but now spilling over into other markets - is what Shiller calls a "natural Ponzi scheme." The basic idea is that something (e.g. a fall in interest rates) causes prices to rise. People notice and jump into the market, driving up prices further. This in turn draws an even bigger crowd ("there's nothing so disturbing to one's well-being and judgment as to see a friend get rich").

What drives this dynamic is our expectations that prices will keep going up at a rapid clip. A homeowner has to move, and instead of selling their old place, decides to keep it and rent it out, betting that prices will be higher a couple years from now. A real estate investor decides to double down, borrowing against their existing portfolio to buy more properties even if they're cash-flow negative, figuring that they'll lose money for now but make money when prices go up further and they sell. An aspiring homeowner borrows to their limit, or goes to an alternative lender, fearing that if they don't buy now, prices will be even further out of reach in a couple of year.

Thus there's lots of buyers, and few sellers.

But what we can see from the US crash in 2008 is that just as with a Ponzi scheme, eventually you run out of new buyers: everyone who can buy has already done so. Prices stop rising and begin to stagnate. Some people who borrowed heavily in the expectation of rising prices (like the cash-flow-negative landlords) find themselves over-extended, and after grimly hanging on for a few years, are forced to sell. As prices gradually decline, at some point the trickle of people heading to the exits turns into a flood, as people give up and decide to cut their losses. Now expectations have reversed, and people are expecting prices to go down.

Disclaimer: This does not mean that a crash is imminent - prices could keep rising for years to come, or they could stagnate for years instead of falling. So I'm not saying that nobody should buy. If you're planning to buy a place and stay there indefinitely, it could be that the advantages of owning (secure housing and forced savings) instead of renting are still worth it, even with the risk of a capital loss.

If this picture of an overheated housing market is accurate, what are the implications?

In normal times, when prices are stable, the advantage of home ownership vs. renting is that you have secure housing, and you have a forced savings plan. Kerry Gold, writing in 2013, when Vancouver condo prices were stable:

As many condo owners who purchased five years ago and are trying to sell today can attest, the equity simply did not materialize. They are often breaking even, or selling for slightly more or less. Today, a condo in Vancouver is no longer viewed as a winning investment, so much as affordable housing and forced savings plan.

It's widely believed, but false, that renting is "throwing your money away." To compare the cost of home ownership to the cost of renting, a rough guide is the 5% Rule: the annual non-recoverable costs of home ownership are about 5% of the price of the home (1% property tax, 1% repairs and maintenance, 3% cost of capital).

In this overheated market, prices have been rising faster than rents, so in Metro Vancouver and the GTA, it turns out to be much cheaper to rent instead of owning. You're giving up the possibility of speculative gains ("buy high, sell higher"), but as an investment, real estate has a lot of disadvantages. So if renting and investing is an option at all, it's worth considering seriously. Summary of Alex Avery's The Wealthy Renter:

Homeowners aren't usually aware of how much they're paying for housing (Avery calls it "rent"). If you have a mortgage, you're paying interest to the bank to "rent" their money; if your house is paid off, you're paying the opportunity cost of having your equity tied up in your house instead of generating 4% annual income. As you pay down your mortgage, you're shifting from one form of rent to the other.
As a result, homeowners tend to overconsume housing. For renters, it's easier to see that your housing costs are pure consumption.
Over the 25 years from 1991 to 2016, a period when house prices rose as interest rates fell, the stock market outperformed housing. The average annual return on the S&P/TSX composite index was 8%, while the average annual return on Canadian house prices was 3.7%, after taking maintenance and transaction costs into account. That's a 2.5X difference in total return over 25 years.
As an investment, housing has a number of other disadvantages. It's illiquid, it's not scalable (you can't buy a fraction of a house), and it's undiversified.
The big advantage of homeownership is that it's a forced-savings program. So if you rent, you'll want to do something equivalent to force yourself to save, using a payroll-deduction plan or automated monthly transfers to an investment account, and investing in something like VBAL or another asset-allocation fund with low costs.

Avery also has some comments on specific real estate markets.

Looking forward:

Prices can't keep rising to the moon. They're likely to stagnate or crash at some point, as they did in the US in 2008, although we don't know when.
Restrictions on foreign buyers are a legit option (as in BC), but if we're in a "natural Ponzi scheme," domestic buyers are enough to keep the market overheated.
It's possible to engineer a crash by raising interest rates or the mortgage stress test, but this isn't going to make buying your first home any more affordable.
If you have the option of renting instead and building up your retirement savings through investing, it's worth considering seriously. We probably need to build a lot more rental buildings - they provide more security compared to renting a condo or secondary suite. More vacancies will help to push down rents.
If you're planning to buy a place and stay there indefinitely, that could still make sense. Just don't expect that prices are going to keep rising forever.
If you own more than one place, you might want to sell before the music stops.

I posted this (and labelled it as a "rant") on /r/canadahousing. Some of the comments were quite interesting, with people arguing that their expectations of indefinite rapid growth in home prices were in fact realistic!

Book-length discussion of speculative asset bubbles:

Irrational Exuberance, by Robert Shiller (2000). The second edition talks about the US housing bubble, the third edition talks about complacency driving up stocks.
Manias, Panics, and Crashes: A History of Financial Crises, by Charles Kindleberger (1978).
House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again, by Atif Mian and Amir Sufi. An eye-opening analysis of the post-2008 recession and grinding recovery: When people are heavily indebted they cut back spending, causing a wider recession. Not sure we'll see that scenario play out here in Canada - even if domestic demand is down, demand for Canadian exports will be high as long as the US economy is still going strong.

A couple YouTube videos:

Flashback: Shiller calls the housing bubble, from CNN Business.

Shiller lecture on housing and the financial crisis. I've linked to the most interesting part, where he describes the role of complacency - in 2005, people found it unthinkable that housing prices could crash. In Canada we have the benefit of seeing what already happened in the US!

Canada Day 2021

2021-07-01T00:00:00-07:00

Canada isn't an abstraction - it's 38 million people.

I would suggest that the point of Canada Day is not so much to celebrate pride in Canada as to strengthen the feeling of connection that we have with other Canadians as a community. I think that's a necessary and fundamental part of public life. If people didn't care at all for anyone beyond their immediate circle of family and friends, if they didn't feel a degree of responsibility for other Canadians in general, why would they be willing to pay taxes for any program (like CERB) that did not benefit them personally? Why would they care about the tragedies of people they'll never meet?

Somewhat like a war, the Covid crisis really demonstrates the importance of social solidarity. How willing are we to make sacrifices for other people who we don't know and will never meet?

At the same time, turning Canada Day into a contest of patriotism, as O'Toole is doing - "what's the matter, aren't you proud of Canada?" - also seems wrong.

This year it makes sense to mourn and to reflect - both the children who died at the residential schools and are buried in unmarked graves, and all those who died from Covid over the last year and half. But the feeling of belonging to a national community is not dispensable.

Why Universal Basic Income isn't workable

2020-09-06T00:00:00-07:00

Unemployment rate, January 1976 to May 2020. Source: Statistics Canada

Our current social safety net is based on the goal of full employment, driven by monetary policy (interest rates) and fiscal policy (deficits and surpluses). It's primarily targeted at people who can't work - the elderly, children and single parents, the disabled - and people who are temporarily out of work. There's welfare payments for people who don't fall into any of these categories, but they're generally regarded as inadequate and a last resort.

A Universal Basic Income (also known as a Basic Income or a Guaranteed Annual Income) - giving a livable income, say $2000/month, to everyone - is an idea that has been around for a long time, and that has many enthusiastic advocates. They argue that it'd be simpler than the existing system, since it wouldn't require determining who can work and who can't, and that a lot of the funding could be provided by dropping the existing programs. It would give recipients far more personal security and freedom - they would no longer have to go to work to pay the rent, and so employers would have to offer higher pay or more meaningful work.

The big question is, how do we pay for it?

If we can pay for CERB by having the Bank of Canada print the money and buy government bonds, can't we do the same for UBI? No, unfortunately. You can print money to pay for temporary spending, like CERB (paying it back afterward, like wartime debt), but not permanent spending, like UBI. As Paul Krugman points out, printing money puts downward pressure on the unemployment rate: the recipients use the additional money to buy more goods and services, and producing those goods and services requires more workers. When unemployment is high, this isn't a problem. But once we're back at full employment, unemployment can't drop any further (there aren't any more workers to produce those goods and services), and so instead you get inflationary pressure and higher interest rates.

This is true of any permanent program, not just UBI. Whenever anyone proposes new permanent spending, we also need to figure out how to raise more tax revenue to pay for it.

For UBI, Jonathan Rhys Kesselman has run the numbers, and it doesn't look feasible at all. Although it's possible to redistribute income to a relatively small number of people who can't work, UBI requires spreading that income over a far larger number of people, resulting in either too little income to live on (especially for the disabled), or improbably high tax rates.

Unfortunately, despite its simplicity and attractiveness, UBI is unworkable. Stephen Gordon compares UBI to a perpetual motion machine: when it's impossible to build one, it's not productive to spend a lot of time talking about how awesome it would be.

Targeting income support at people who can't work, or who are temporarily out of work, may seem complicated. But that complexity is necessary. As Mencken says, for any complex problem, there's a solution that is simple, neat, and wrong.

I'm not sure supporters realize just how huge the cost of a UBI would be. A Universal Basic Income of $2000/month x 35 million people = $840 billion, which is 50% of GDP. Existing government programs across all levels of government are about 40% of GDP, and presumably we'd want to keep the big-ticket items, like education and health care. Spending 40% of GDP on public services is doable. 45% doesn't seem too bad. 90%? No way.

Can we whittle that cost down? Sure. The income would be taxable, so the net cost would be something like 35-40% of GDP. With UBI in place, we could cut CCB, EI, OAS, GIS - maybe 5-10% of GDP. So we're still looking at a total of 65%-75% of GDP. I don't want to say that this would be impossible, but given that BC couldn't even switch from 7% PST + 5% GST to 12% HST (because restaurant meals would have been taxed at 12% instead of 5%), I'm pretty skeptical.

In contrast, the net cost of replacing the UCCB and the Family Tax Credit (Harper's income-splitting tax credit) with the Canada Child Benefit was about $2 billion, or 0.1% of GDP. And that brought down the number of children living in poverty by 700,000, or about a third!

UBI supporters want to help people, which is totally admirable. And the rapid response to Covid makes radical changes seem far more possible. But given the huge expense of UBI, I think it makes much more sense to target income-support programs at the relatively small number of people who can't work.

Mike Moffatt:

There’s room to make existing cash transfer programs more generous, and is worth doing. But a full blown Basic Income is such a bad idea. We should prioritize our spending on addressing Canada’s five biggest challenges, listed below.

(1) Climate change and a decarbonizing global economy.

(2) Demographic change and an aging population.

(3) Stagnant economic growth and productivity.

(4) Persistent structural barriers to full participation in the economy and society.

(5) Housing affordability and availability, particularly in our most economically dynamic cities.

Alberta and national unity

2019-11-17T00:00:00-08:00

The election results illustrate a stark divide between Alberta (and Saskatchewan) and the rest of the country. The Conservatives won all seats save one in Alberta and Saskatchewan, but made very little headway in the rest of the country, losing votes in both Ontario and Quebec.

It's hard to find a compromise between people who feel that the oil patch is being ignored, insulted, or undermined, and people who are extremely worried about climate change and want more ambitious action.

From here in BC, I think the message to Alberta should be something like this:

I can understand why Albertans feel that they're taken for granted. Our energy-intensive lifestyle has been made possible by fossil fuels. In Vancouver, most of the gasoline powering our vehicles comes from Alberta refineries - and we complain when gas prices go up. That energy is the result of a lot of long hours and hard work.

Albertans also feel anxious and vulnerable. Oil prices have come down, putting a lot of people out of work. In the long term, climate change and the prospect of declining demand for oil mean that producers with high costs and high emissions intensity are going to find it hard to compete.

This suggests that at some point, Alberta will need to diversify its economy away from fossil fuels. However, this is a decision that must be made by Albertans. It cannot be imposed on Alberta by the rest of Canada.

What the rest of Canada does require - as shown in the election results - is that Alberta accept the need for carbon pricing. It cannot be free to dump CO2 into the atmosphere. Ideally Alberta would implement its own carbon price, as the Notley government did, but if not, Ottawa will do it for them.

Carbon pricing is compatible with continued oil production. As Stephen Gordon says, the justification for a carbon price is that it motivates us to cut the lowest-value emissions, instead of the most visible emissions.

As long as Alberta decides to continue oil production, Canada is willing to support additional pipeline capacity to make sure that Alberta gets the best price for oil production (which benefits the Canadian economy as a whole, not just Alberta).

This is why Ottawa supports the Trans Mountain expansion, despite the minefield of political and legal obstacles in BC. When BC's new government attempted to block it, giving Kinder Morgan cold feet, the Trudeau government used the biggest hammer available by purchasing the pipeline outright. (TMX was an election issue in BC, but in the end the Liberals held the most closely-watched seats, including Burnaby North, North Vancouver, and West Vancouver. In a post-election interview, Horgan appears to be resigned to TMX.)

If at some point in the future Alberta does decide to diversify its economy, Canada is also willing to support it. Replacing fossil-fuel energy with carbon-free energy will require a lot of new projects, which means a lot of engineering and construction work.

If there's a need for federal contributions to support oil well cleanup, or carbon capture projects (like Saskatchewan's Boundary Dam), or new infrastructure for hydrogen production, or retraining programs, the rest of Canada is willing to contribute. Alberta's oil exports have obviously benefited Alberta, but they've also helped the Canadian economy as a whole. People talk a lot about equalization, which isn't a factor in BC, but the oil patch has also bid up wages across the country, especially for blue-collar workers.

Again, though, this is Alberta's decision to make.

Chris Turner suggests that, rather than wartime mobilization, what the climate emergency demands is something like the Marshall Plan. Just as Western Europe had to rebuild after World War II, we need to replace and rebuild our energy infrastructure.

US planners stressed the importance of the Europeans taking the initiative and the responsibility for the plan. From PPS/1:

It is necessary to distinguish clearly between a program for the economic revitalization of Europe on the one hand, and a program of American support of such revitalization on the other. It would be neither fitting nor efficacious for this Government to undertake to draw up unilaterally and to promulgate formally on its own initiative a program designed to place western Europe on its feet economically. This is the business of the Europeans. The formal initiative must come from Europe; the program must be evolved in Europe; and the Europeans must bear the basic responsibility for it. The role of this country should consist of friendly aid in the drafting of a European program and of the later support of such a program, by financial and other means, at European request.

I think the same approach would be useful here.

A reading list on Alberta and national unity. This isn't a comprehensive list, just my attempt to pull together some material that may be of interest to people concerned about national unity.

(1) The human view

Kate Beaton, Ducks. A short webcomic series. Beaton spent a year or two working in Fort McMurray, and her comics provide an on-the-ground view of what that looks like.

Chris Turner, The Patch: The People, Politics, and Pipelines of the Oil Sands. Reviews. A sympathetic history of the oil sands from an environmental writer (Turner is also the author of "The Leap").

Turner describes Alberta's perspective:

The culture of a place - and an industry - often endures even in the face of radically changed circumstances. A company town still sees itself as intimately connected to a long-departed industry, a business sector moves from margin to mainstream (or vice versa) without embracing its changed role. The oil sands were an underdeveloped subsector at the margin of the global oil industry, situated deep in the hinterland, far from centres of economic or political power. Calgary was a scrappy business town of ranchers and wildcatters, not a political capital or financial hub, in a province long treated as the hick prairie cousin of Confederation. The Patch emerged on the margin of a margin of a margin. It boasted of energy superpower status even as it still felt, at its core, like a risky frontier dream in constant danger of failure.

Turner concludes:

When the Patch’s boosters say they are simply supplying a product everyone uses every single day, they are not wrong. When the prime minister says, “No country would find 173 billion barrels of oil in the ground and just leave them there,” he’s not wrong. When anti-pipeline protesters say some of that oil has to stay in the ground, they’re not wrong. When Indigenous people say they’ve never been properly consulted about what those pipelines and bitumen mines are doing to their land, they’re not wrong.

There’s more to the debate, though, more to the way forward, than being right. A thing of such scope and power and wealth as the Patch doesn’t go away overnight or in a few years. Building the entire industrial basis of modern society on a new energy regime does not happen overnight or in a few years. We will have the Patch for decades. It is a fixture on the Canadian landscape. It employs tens of thousands. It is a truly national project or else the term has no meaning.

We have all benefited. We are all stakeholders. We are all complicit.

(2) Pipeline capacity and economics

Andrew Leach, Canadian Oil Export Pipeline Capacity and Export Demand. A visualization of NEB data.

Kent Fellows, The Invisible Cost of Pipeline Constraints. Estimates the cost of the increased discount on Canadian oil due to pipeline constraints: about $15B/year. Half of that is reduced revenue for the Alberta government. For a longer explanation, see Scotiabank, Pipeline Approval Delays.

Tristin Hopper, Why Canada shouldn't refine the oil it exports. An excellent explanation of the economics of oil extraction and refining.

(3) Notley's climate policy

Justin Giovannetti and Jeffrey Jones, Alberta carbon plan a major pivot in environmental policy. Globe article describing Notley's climate plan, announced in November 2015 with support from both environmentalists and the CEOs of major oil producers.

The Leach Report (Climate Change Advisory panel report). The detailed blueprint for the Notley government's climate policies, including an economy-wide carbon tax, phasing out coal-fired power by 2030, and a cap on total emissions from the oil sands.

This wasn't enough for the Horgan government in BC, which made a serious attempt to keep the Trans Mountain expansion from happening. This was likely a major factor in the 2019 election result in Alberta: The perception was that trying to work with Ottawa had failed, so it was time for a more adversarial approach.

Eric Denhoff, What will Alberta oil sands producers say now when Wall St. asks about climate policy? An op-ed by the former deputy minister for climate change, describing how investors are asking for strong environmental policies.

(4) What's next?

Eric Denhoff, Why are Albertans so damned angry? A good article published by the Georgia Straight, the local alt-weekly in Vancouver. Unemployment is high; the oil and gas industry is unhappy about C-69; Kenney's political interest lies in inflaming the situation.

Jen Gerson, How to harness the volatility of the populist right. She describes what Kenney is trying to do, using a metaphor from Preston Manning:

It starts with a description of a rogue well - an oil or gas well in which pressure from below builds until it explodes. The only way to prevent catastrophe is to drill a relief well, a secondary line that channels and vents that pent-up energy. Drill the relief line too deep or too shallow and the rogue well explodes anyway: hit the right angle and the canny drill operator can harness the energy to his own end.

This, Manning believes, is the nature of populism. Ignore it and it will consume you; tap it clumsily and it will both explode and leave you implicated in its self-destruction. But drill that relief well just right and energy abounds.

The Economist, Aramco is both the industry's Goliath and a firm vexed by problems. A good description of how the oil industry as a whole is grappling with the challenge of peak demand as climate change looms larger. Aramco's plan is to be the last producer standing. They have compelling advantages: both low production costs (less than $3/barrel) and low emissions.

The national climate plan survives its first electoral test

2019-10-22T00:00:00-07:00

I'm very glad that the national climate plan has survived its first electoral test.

Scheer's team thought that they could swing the suburban GTA ridings by making people angry about the carbon tax, falsely claiming that it was a federal tax grab. If Scheer had succeeded yesterday, politicians both in Canada and elsewhere would likely have concluded that an explicit carbon tax (even one returned as a dividend) is political poison. Instead, they now have a clear example of a stringent carbon tax surviving a national election, even after the government had lost substantial political capital due to unrelated scandals.

I'm intensely curious about two questions: (1) whether the CPC will drop their opposition to carbon pricing, now that they've tried and failed to ride it to victory; (2) what policies the Trudeau government will put in place to meet the more aggressive 1.5 C target, especially since it now has to depend on NDP support.

Toast Kaizen

2019-08-04T00:00:00-07:00

A 30-minute video from 2004 explaining the Toyota manufacturing principle of Kaizen, or small improvements, illustrated by making toast. The presenter, Bruce Hamilton, discusses seven forms of waste which can be identified by direct observation: motion, waiting, storage, transportation, defects, processing, and overproduction.

Mian and Sufi on debt

2019-04-28T00:00:00-07:00

There's a warning that often appears in personal finance books: "Leverage cuts both ways." Because people usually borrow 80% or 90% of the price when buying a home, any gains due to an increase in the price are magnified - but any losses due to a decline are magnified as well.

In House of Debt (2014), a striking analysis of the 2007 housing crash and post-2008 recession, economists Atif Mian and Amir Sufi explain that when house prices decline, it's the borrower who bears the losses.

Debt plays such a common role in the economy that we often forget how harsh it is. The fundamental feature of debt is that the borrower must bear the first losses associated with a decline in asset prices. For example, if a home owner buys a home worth $100,000 using an $80,000 mortgage, then the home owner's equity in the home is $20,000. If house prices drop 20 percent, the home owner loses $20,000 - their full investment - while the mortgage lender escapes unscathed. If the home owner sells the home for the new price of $80,000, they must use the full proceeds to pay off the mortgage. They walk away with nothing. In the jargon of finance, the mortgage lender has the senior claim on the home and is therefore protected if house prices decline. The home owner has the junior claim and experiences huge losses if house prices decline.

But we shouldn't think of the mortgage lender in this example as an independent entity. The mortgage lender uses money from savers in the economy. Savers give money to the bank either as deposits, debt, or equity, and are therefore the ultimate owners of the mortgage bank. When we say that the mortgage lender has the senior claim on the home, what we really mean is that savers in the economy have the senior claim on the home. Savers, who have high net worth, are protected against house-price declines much more than borrowers.

Now let's take a step back and consider the entire economy of borrowers and savers. When house prices in the aggregate collapse by 20 percent, the losses are concentrated on the borrowers in the economy. Given that borrowers already had low net worth before the crash (which is why they needed to borrow), the concentration of losses on them devastates their financial condition. They already had very little net worth - now they have even less. In contrast, the savers, who typically have a lot of financial assets and little mortgage debt, experience a much less severe decline in their net worth when house prices fall. This is because they ultimately own - through their deposits, bonds, and equity holdings - the senior claims on houses in the economy. House prices may fall so far that even the senior claims take losses, but they are much less severe than the devastation wrought on the borrowers.

Mian and Sufi go on to examine the distribution of losses due to the $5.5 trillion decline in US house prices during the recession. In 2007, for the bottom 20% of households, nearly all their net worth was in home equity, and their debt-to-asset ratio was 80%. For the top 20%, nearly all their net worth was in financial assets, and their debt-to-asset ratio was only 7%. They summarize:

The net worth of poor home owners was absolutely hammered during the Great Recession [when house prices fell 30%]. From 2007 to 2010, their net worth collapsed from $30,000 to almost zero. This is the leverage multiplier at work. The decline in net worth during the Great Recession completely erased all the gains from 1992 to 2007.

In contrast, the top 20% of households were barely affected.

As the net worth of highly levered households declined, they cut back their spending - Mian and Sufi use county-level data to back this up. This in turn led to job losses across the entire economy.

Mian and Sufi conclude by proposing a more equity-like structure for mortgages, where the lender would absorb part of the loss due to a decline in house prices, in exchange for a modestly higher rate of return.

Investing as lending

2019-04-14T00:00:00-07:00

Investing basically means lending out your money, and getting some kind of return on it.

There’s two kinds of investments: debt and equity. With debt, you lend the money and get a fixed rate of interest. With equity, you buy a small slice of a business and get a share of its earnings. Typically the business will pay out some of its earnings as a cash dividend and reinvest the rest to expand its business (for example, by adding more stores), causing its value to grow.

Either way, the value of your investment compounds over time. The rule of 72 says that if your annual return is x%, then it takes about 72 / x years for your money to double. At 5%, for example, it doubles every 14 years or so. So if you can invest $10,000 at 5% and not touch it for the next 40 years, it’ll double a bit less than three times, increasing to $70,000.

Equity investments are volatile: they go up and down. So investors aren’t willing to pay as much as for debt investments, resulting in a higher return on equities. In the long term, equity investments grow faster than debt investments. You take a higher risk and get a higher return.

There's different approaches to investing in equities:

Stock picking - you look for companies which you think are undervalued, i.e. selling for less than they're worth, and buy their shares.
Buy a mutual fund - a mutual fund is run by a manager who actively decides what companies to invest in, spreading your investment over a larger number of companies. Charges an annual fee of 1-2%.
Buy an index fund - an index fund has much lower fees (0.25% or less), because you just buy a small slice of all companies in the stock market ("passive investing"). There's no need to pay a manager and their staff to look at each company and decide whether it's undervalued or not.

A common approach is to keep your costs low by just buying index funds. Stock picking is hard: it's like trying to find a diamond in a field that's already been searched by an army of professionals. With mutual funds, you’re paying a lot. When your expected average annual return is around 5%, 1-2% is a big chunk. And because stock picking is hard, mutual fund managers have a very hard time doing better than average.

Index funds are liquid (you can sell them easily), diversified (you’re not going to lose all your money if a single company or a single economic sector does badly), and scalable (unlike real estate, you can buy as much or as little as you want).

You probably don't want 100% of your retirement savings in equities, because they go up and down, which can be pretty hard to take. (You don’t want to panic and sell when they’re low.) A common recommendation is to keep 40% or 50% in bonds (interest-paying debt investments), which are less volatile, providing some stability and reassurance when the stock market is going through a meltdown.

For Canadians, the Vanguard Balanced ETF Portfolio fund, VBAL, is a simple, hands-off, low-cost way to keep your investments 60% in equities, 40% in bonds, with an annual management fee of 0.22%. (iShares and BMO also offer asset allocation funds. For Americans, the equivalent is the Vanguard LifeStrategy Moderate Growth fund.)

In retirement, you can generate cash from your investments by selling about 4% each year.

For a step-by-step guide, I'd recommend John Robertson's book The Value of Simple: A Practical Guide to Taking the Complexity out of Investing. For more details, see Dan Bortolotti's Canadian Couch Potato blog.

The Trans Mountain expansion

2019-01-13T00:00:00-08:00

From here in BC, the Trans Mountain expansion project (TMX) seems like an irresistible force meeting an immovable object. I think the Trudeau government will still make it happen, but it won't be easy.

Lack of pipeline capacity is costing the Canadian economy something like $15B/year, due to the increased discount on Canadian oil exports. Most of that cost is borne by Alberta, but not all of it, since the oil sands bid up wages across Canada. Scotiabank.

On the other side, there's three major obstacles: the increased risk of a tanker spill, opposition to climate policy in Alberta, and most importantly, the delicate political situation with First Nations in BC.

Finally, there's people who are fine with the pipeline when it's the private sector that's taking on the financial risks, but who don't like taxpayers bearing the risk.

(1) Increased risk of a tanker spill

People in Vancouver are concerned about the increased risk of a tanker spill - the number of tanker visits will increase from 1/week to 1/day. That said, the Trans Mountain expansion is following an existing right-of-way to a busy commercial port (unlike Northern Gateway, which would have been a new pipeline to the north coast). Vancouver has 3200 large container ships and cruise ships visiting each year, along with the ferries going back and forth. We've shipped oil out of Vancouver for the last 60 years, and diluted bitumen for the last 30 years. The Trudeau government is aiming to boost marine safety for all commercial shipping in and out of Vancouver, not just the additional tankers.

It's probably worth noting that without new pipelines, Alberta will buy thousands of tanker cars and ship the oil by rail, which is both more expensive and less safe.

(2) Climate change

The Trans Mountain expansion also ties into people's concerns over climate change, and Alberta's opposition to climate policy. It's great that the Notley government has put a serious climate policy in place (with a broad carbon tax and phasing out coal-fired power), halting Alberta's total growth in emissions. But Kenney's promising to reverse this if he defeats Notley in May 2019.

This is where the federal backstop comes in. Under the national climate policy, each province can either do carbon pricing itself, or the federal government will do it for them, using a federal carbon tax starting at $20/t or 4.4 c/L (and returning the revenues to households in the province). This starts April 1 in Ontario, Saskatchewan, Manitoba, and New Brunswick.

Why is carbon pricing so important? (There's other measures in the national climate plan, like phasing out coal-fired power by 2030, but carbon pricing is the centrepiece.) The basic idea is that first we cut emissions which are worth less than $20/t, than those which are worth between $20/t and $30/t, and so on. This is cost-effective, because we're always cutting the cheapest, least valuable emissions first. And it's fair, because it distributes the costs across the entire economy, rather than putting them all on a particular province (Alberta) or a particular economic sector (the oil sands).

Andrew Scheer's vowed to end the federal carbon tax if he's elected in October 2019. But defeating Trudeau will be a much heavier lift than defeating Notley.

The other question is: okay, cutting emissions with a carbon tax is fine, but shouldn't we also be trying to cut global emissions by not adding any more supply? (The "keep it in the ground" / "climate leaders don't build pipelines" argument.)

It turns out that trying to cut global emissions by withholding supply is ineffective as well as expensive. It's ineffective because oil-importing countries will just buy their oil elsewhere. (If I buy all my groceries from my local Safeway, and it shuts down, I won't starve.) Replacing a barrel of Canadian oil with a barrel of oil from elsewhere isn't entirely ineffective, because Canadian oil is somewhat more emissions-intensive to extract than the world average - but most of the emissions come from actually burning the oil. And it's expensive, of course, because of the resulting discount on Canadian oil. Trevor Tombe.

Abacus asked about this directly:

Most Canadians reject the argument that increasing the capacity of pipelines to get our oil to new markets will end up meaning more oil will be used in the world for longer. The majority (68%) believes that expanding our access to new markets won’t affect global oil consumption but will increase the economic benefits for Canadians.

(3) First Nations

First Nations in BC never ceded their land by treaty, unlike the rest of Canada. I think of them as our landlords. Northern Gateway was overturned by the courts because the Harper government had failed to consult with First Nations, and in fact had really aggravated them. (Eden Robinson, writing in 2014: "If Enbridge has poked the hornet's nest of aboriginal unrest, then the federal Conservatives, Stephen Harper's government, has spent the last few years whacking it like a pinata.")

The Trudeau government, bearing this in mind, did more consultation. The courts ruled that it was still inadequate - the government had listened to First Nations concerns, but their duty is to assess and respond to these concerns, not just listen. Timothy Huyer explains. The Trudeau government is working on remedying this, rather than trying to rush the process and causing further delays. It's a stitch-in-time-saves-nine situation.

To me, this is the biggest obstacle. It's primarily legal rather than political.

(4) Financial risk

Finally there's the view that it's fine if a private company (Kinder Morgan) wants to build the pipeline and bear the risks, but the federal government shouldn't be buying it for $4.5 billion (plus construction costs), putting the financial risk on the taxpayer.

I understand people's concerns about the risk of a tanker spill, but I'm not so worried about the financial risk. Shippers are desperate for more pipeline capacity, so much so that they've already bought most of the capacity of the pipeline for the next 15-20 years. Pipeline tolls are fixed, so there's no risk of low prices. Tripling the capacity of the pipeline will bring annual revenue up to about $1B/year.

Originally posted to Reddit: What are some of your thoughts on the Trans-Mountain-pipeline?

Earlier posts:

The Trudeau-Notley compromise, 2018-11-11
ELI5 - the pipeline situation, 2018-10-07

Hope for the best, plan for the worst

2018-12-23T00:00:00-08:00

How do you make decisions when the outcome is uncertain? A good general rule is to hope for the best, but plan for the worst.

An example from the H-DIPLO mailing list (for historians of foreign policy):

From: Eric Bergerud
List Editor: "H-DIPLO [Rausch]"
Editor's Subject: Nixon, Kissinger, and Vietnam [Bergerud]
Author's Subject: Nixon, Kissinger, and Vietnam [Bergerud]
Date Written: Mon, 20 Oct 2003 11:34:28 -0700

I don't think I clearly addressed the issue of whether or not Nixon and/or Kissinger believed that the 1973 agreement would lead to the establishment of an independent non-communist [South] Vietnam (in which case the war would have been a "victory" every bit as much as Korea had been) or whether they believed that Paris would lead to a "decent interval" - a kind of sophisticated sell-out.

I am not sure that I can read Nixon's tea leaves on this issue. However, I think Kissinger's intentions are a little more understandable. Kissinger admired the great diplomats of the 19th Century: Metternich, Bismarck, etc. Bismarck in particular never thought that events could be predicted with precision. When a policy was pursued a range of outcomes could be expected. The trick was to develop policy where the minimum outcome (today we might call it a worst case scenario) was acceptable. If a triumph ensued great. If it was something in between, don't die of surprise.

It was no secret that many "Henry watchers" inside and outside the administration thought that Kissinger considered Thieu expendable. (Thieu thought this.) He did not desire the fall of SVN, but believed that LBJ and others had grossly overestimated the harm that a Hanoi victory would have on America's position. Kissinger was, however, extremely concerned about the overall course of the Cold War and wanted American concentration firmly pointed in the correct direction - dealing with Moscow. I rather think Kissinger enjoyed juggling the fears and desires of Moscow, Beijing and other lesser players. The biggest obstacle to playing the game, as made clear in his memoirs, was the Vietnam War.

Therefore Paris was a good deal from Kissinger's point of view. The minimum outcome was an American withdrawal from Vietnam and a face-saving interval of peace: an acceptable position from which to get down to truly important business even if the GVN failed in the end. The maximum outcome, which I suppose sounded feasible, was that Thieu would stick it out and the US could, at some future date, claim victory.

The important point is that wherever events fell on the minimum-maximum continuum, America was out of the war and had its hands free to play the great game on even terms. In sum, I think Kissinger would have considered Paris good work regardless of what took place ultimately in Vietnam.

Eric Bergerud

How not to do it: E. H. Carr quotes Alfred Marshall.

Much that was said and written about international politics between 1919 and 1939 merited the stricture applied in another context by the economist Marshall, who compares "the nervous irresponsibility which conceives hasty utopian schemes" to the "bold facility of the weak player who will speedily solve the most difficult chess problem by taking on himself to move the black men as well as the white".

Annihilation and death

2018-11-25T00:00:00-08:00

Hans Morgenthau explains how the prospect of general nuclear war and the annihilation of civilization changes our experience of death. "Death in the Nuclear Age" (1961):

In the works of his mind, man, the creator, survives.

Yet why are those works a "monument more lasting than bronze," and why can their creator be confident that "on and on shall I grow, ever fresh with the glory of after time"? Because the man endowed with a creative mind knows himself to be a member in an unbroken chain emerging from the past and reaching into the future, which is made of the same stuff his mind is made of and, hence, is capable of participating in, and perpetuating, his mind's creation. He may be mortal, but humanity is not, and so he will be immortal in his works. ...

Man gives his life and death meaning by his ability to make himself and his works remembered after his death. Patroclus dies to be avenged by Achilles. Hector dies to be mourned by Priam. Yet if Patroclus, Hector, and all those who could remember them were killed simultaneously, what would become of the meaning of Patroclus's and Hector's death? Their lives and deaths would lose their meaning. They would die, not like men but like beasts, killed in the mass, and what would be remembered would be the quantity of the killed - six million, twenty million, fifty million - not the quality of one man's death as over against another's. Of their deeds, nothing would remain but the faint hope of remembrance in distant places. The very concept of fame would disappear, and the historians, the professional immortalizers, would have nothing to report. What had been preserved and created through the mind, will, and hands of man would be dissolved like man himself.

Having grown up with the threat of nuclear war - I was in high school in the early 1980s, when tensions in the Cold War were high - I find it easier to think about global warming with equanimity. Global warming is a terrible threat, but at least it's a slow-motion problem.

Moral humility

2018-11-18T00:00:00-08:00

Lucius Shepard, Life During Wartime (1987):

It occurred to Mingolla that his father had been right about war, that it had indeed made a man out of him. He could see intricacies that he had never before suspected, he understood the nature of his responsibilities and felt able to handle them. But the problem was that he had not become a very nice man. Not even average. His capacity for violence and indifference bore that out.

The Trudeau-Notley compromise

2018-11-11T00:00:00-08:00

My attempt to explain the Trudeau-Notley compromise: take climate change seriously, halt Alberta's growth in emissions, and use a rising price on carbon to cut Canada's fossil CO2 emissions, while continuing to export Canadian oil and trying to get the best price for it instead of leaving money on the table.

For the full story, see the Leach Report.

Introduction

There's two related problems:

Lack of pipeline capacity. This is costing the Canadian economy something like $15 billion per year, due to spikes in the discount on Canadian oil exports.
Climate change. By burning fossil fuels, we're cranking up the global thermostat.

Trudeau's line (similar to Notley's) is that we have to find a balance. We can't ignore either the economy (like Horgan) or the environment (like Scheer, Ford, and Kenney).

Trudeau's strategy has been to pursue both: on the pipeline front, to add Line 3, Keystone XL, and the Trans Mountain expansion. On the climate change front, to put a price on pollution, using a steadily rising carbon price to cut demand for fossil fuels.

Carbon pricing

Economists are pretty much unanimous that a rising carbon price, offset by income-tax cuts (as in BC) or dividends paid to households (as in the federal backstop plan) is the most cost-effective way to reduce fossil fuels. William Nordhaus (who just won the Nobel Prize in economics) also argues that it's the best way to coordinate international action, rather than trying to use quotas.

Under the federal plan, each province can either implement carbon pricing itself (as in BC, Quebec, and Alberta), or the federal government will do it for them (as in Ontario). Ottawa is setting a price floor: $20/t in 2020, about 4.5c/L, rising $10/t each year to $50/t in 2023. All the money raised in each province stays in that province, instead of going to Ottawa, so it's not a federal tax grab.

At $50/t, Canada's emissions should be about 20% lower than without pricing.

According to the IEA, the price path required to stabilize CO2 at 450 ppm is US $20/t by 2020, $100/t by 2030, and $140/t by 2040. A key point is that even in the IEA's 450 ppm scenario, while coal usage drops off rapidly, oil consumption is pretty steady, and additional sources of oil will be needed to supply demand.

Everyone hates taxes, of course. It's going to be a shield issue for Trudeau in 2019. Some key points here:

All the money goes either directly back to households as a refundable tax credit (90%) or to schools, hospitals, and small businesses (10%). Because fossil-fuel use varies a lot between households, the estimate is that 70% of households will be better off - they get more back than they'll be spending.
To protect Canadian competitiveness for industrial sectors which use a lot of fossil fuels, Ottawa is adopting an approach developed by Alberta, called output-based allocations (OBAs) developed in Alberta. Basically it means that within each sector, the dirtiest firms are worse off and the cleanest firms are better off.

Pipelines

Most of the $15 billion/year economic benefit of additional pipeline capacity will go to Alberta, of course, but not all - the oil sands bid up wages across the country, especially for the trades.

There's a lot of resistance to climate change policy in Alberta, which is natural - what do Albertans get out of it? This is why both Notley and Trudeau have made clear that the Trans Mountain expansion wouldn't have been approved without Alberta's climate change policy.

This is why Trudeau has put so much political capital into getting TMX built. There's two remaining legal hurdles at this point - assessment and mitigation of the increase in tanker traffic, and mitigation on First Nations issues.

Note that with both Keystone XL and TMX underway, Energy East didn't actually make economic sense - there's not enough oil production to fill the pipes (Energy East's capacity would have been huge).

Criticisms

Naturally, a compromise position can be attacked from two sides.

From the left: climate leaders don't build pipelines.

Because Canada's a leading supplier of fossil fuels, it's natural to ask whether we can reduce global emissions by withholding supply (e.g. not building additional pipelines) as well as reducing demand. Unfortunately, all that means is that oil-importing countries will buy their oil elsewhere. (If I buy all my groceries from my local Safeway, and it shuts down, I won't starve.) Because of OPEC, which keeps the price of oil in a target range, it won't even raise the price of oil.

So trying to reduce global emissions by withholding supply is ineffective as well as expensive. If we need to reduce emissions faster, we should focus on demand-side measures (e.g. vehicle fuel-efficiency standards).

From the right: we're too small to matter.

Unfortunately this isn't true either. Canada has the world's third-largest oil reserves (after Venezuela and Saudi Arabia). The oil sands are too large to hide from the spotlight. As climate change gets worse and worse, pressure on governments to do something will increase, and the Canadian oil sands will make a convenient scapegoat.

So even you're pessimistic (or cynical) and think the international effort to fight climate change goes nowhere, we still have a self-interested reason to pursue carbon pricing: it's a shield against environmentalists claiming that Canada is destroying the climate. We can say, "Hey, we're doing our part to reduce our emissions, and if everyone else does the same, we can stabilize CO2 levels at 450 ppm."

Robert Gilpin on the difficulty of retreat

2018-11-04T00:00:00-07:00

Robert Gilpin, War and Change in World Politics (1981), on the difficulty of retreat:

The fundamental problem with a policy of appeasement and accommodation is to find a way to pursue it that does not lead to continuing deterioration in a state's prestige and international position. Retrenchment by its very nature is an indication of relative weakness and declining power, and thus retrenchment can have a deteriorating effect on relations with allies and rivals. Sensing the decline of their protector, allies try to obtain the best deal they can from the rising master of the system. Rivals are stimulated to "close in," and frequently they precipitate a conflict in the process. Thus World War I began as a conflict between Russia and Austria over the disposition over the remains of the retreating Ottoman Empire (Hawtrey, 1952, pp. 75-81).

Because retrenchment signals waning power, a state seldom retrenches or makes concessions on its own initiative. Yet, not to retrench voluntarily and then to retrench in response to threats or military defeat means an even more severe loss of prestige and weakening of one's diplomatic standing. As a consequence of such defeats, allies defect to the victorious party, opponents press their advantage, and the retrenching society itself becomes demoralized. Moreover, if the forced retrenchment involves the loss of a "vital interest," then the security and integrity of the state are placed in jeopardy. For these reasons, retrenchment is a hazardous course for a state; it is a course seldom pursued by a declining power.

Gilpin goes on to describe a successful example of retreat: Great Britain towards the end of the 19th century. In order to focus on the threat of German naval expansion, Britain resolved its issues with the US, Japan, France, and Russia.

Robert Gilpin on equilibrium and decline

2018-10-28T00:00:00-07:00

Robert Gilpin, War and Change in International Politics (1981), describes the relationship between economic growth and power, like Paul Kennedy's The Rise and Fall of the Great Powers: Economic Change and Military Conflict, 1500-2000. Compared to Kennedy, Gilpin's book is considerably more abstract and concise.

Gilpin describes the dynamics of decline:

Speaking broadly, the national income of a society is distributed into three general sectors: protection; consumption (private and public); productive investment. Protection relates to the costs of national security and the costs of protecting the property rights of citizens. Consumption refers to private and public consumption of goods and services. Investment is that part of the national product that is returned to the productive sector of the economy to increase the efficiency and productivity of land, labor, and, in the modern world, industrial plant.

For a number of reasons that will be discussed later, the historical tendency is for the protection and consumption (private and public) shares of national income to increase as a society ages. This, in turn, means that the share of gross national product reinvested in the economy must of necessity decrease (unless, of course, additional resources can be obtained from other economies). As a consequence, the efficiency and productivity of the productive sector of the economy on which all else rests will decline. If the productive base of the economy erodes, it becomes more difficult to meet the rising demands of protection and consumption without further cutbacks in productive investment, thus further weakening the future economic health of the society. The society enters a downward spiral of rising consumption and declining investment that undermines the economic, military, and political foundations of the state's international position. As a consequence of these developments, the declining power begins to experience what Harold and Margaret Sprout aptly called "the dilemma of rising demands and insufficient resources" (1968).

Taxation as collective shopping

2018-10-21T00:00:00-07:00

Taxation and public spending is basically a form of collective shopping. For some goods (food, clothing) it makes no sense to buy them collectively. For others (roads, insurance) it does make sense.

Joseph Heath, Filthy Lucre:

One of the goods that can often be purchased most efficiently through taxes is insurance. Since the benefits of an insurance scheme come from the pooling of risks, the size of the gain is often proportional to the size of the pool. As a result, it is in our interest in many cases to purchase insurance using the mechanism of universal taxation and public provision. This is basically how the health care system in Canada works. I pay taxes, and what I get in return is a basic health-insurance policy, provided by the state. So if Canadians want to consume more health care or a new subway or better roads, what are their options? The situation is the same as with the condo residents who want a new sauna: If people want to buy more of this stuff (and are willing to buy less of something else), then they should vote to raise taxes and buy more of it. It doesn't necessarily impose a drag on the economy to raise taxes in this way, any more than it imposes a drag on the economy when the residents of a condo association vote to increase their condo fees.

One can see, then, the absurdity of the view that taxes are intrinsically bad, or that lower taxes are necessarily preferable to higher taxes. The absolute level of taxation is unimportant; what matters is how much individuals want to purchase through the public sector (the "club of everyone"), and how much value the government is able to deliver. This is why low-tax jurisdictions are not necessarily more "competitive" than high-tax jurisdictions (any more than low-fee condominiums are necessarily more attractive places to live than high-fee condominiums). Furthermore, the government does not "consume" the money collected in taxes - this is a fundamental fallacy; it is merely the vehicle through which we organize our spending. In this respect, taxation is basically a form of collective shopping. Needless to say, how much shopping we do collectively, and in what size of groups, is a matter of fundamental indifference from the standpoint of economic prosperity.

Wastefulness as a sin

2018-10-14T00:00:00-07:00

An illustration of wastefulness as a sin, from a novel set in 14th-century Norway: The Mistress of Husaby (1921), the second novel of the Kristin Lavransdatter trilogy, by Sigrid Undset.

Kristin had not had much sleep the first night, even though the priests had blessed her bed. 'Twas spread above with silken pillows, with sheets of linen and the bravest rugs and furs; but beneath was dirty, mouldy straw, and there was lice in the bed-clothes and in the splendid black bearskin that was spread over all.

... there was a loft half full of flax that had been left lying unused - there must have been the greatest part of many years' harvest. And then a storehouse full of old, old unwashed and stinking wool, some in sacks and some lying loose in heaps. When Kristin took up a handful, a shower of little brown eggs fell from it - moth and maggots had got into it.

... When she saw in what an ill way all things were here, and how much there was for to set her hand to, a thought shot through her clear and hard; if she had burdened her soul with sin that she might come hither, let it even be so - but 'twas no less sin to deal with God's gifts as they had been dealt with here.

ELI5 - the pipeline situation

2018-10-07T00:00:00-07:00

Back in August, someone on Reddit asked:

Please excuse my ignorance on this topic (I only arrived in Canada recently) - but can someone explain like I'm five the whole pipeline situation?

I think of it as an irresistible force (there's $15 billion/year at stake) meeting an immovable object (the opposition of the BC government).

Canada produces and exports a lot of oil, especially from Alberta. An ongoing problem is lack of transport capacity, resulting in a big discount on Canadian oil exports. This will cost the Canadian economy more than $10 billion in 2018 alone, and $15 billion/year after that, although that can be reduced by shipping some oil by rail. Scotiabank.

The Trans Mountain expansion (TMX) is one of four major pipeline projects that have been proposed in recent years. (Keystone XL, expanding an existing pipeline to the US, is still ongoing. Northern Gateway's approval was overturned by the courts, and Energy East was cancelled because it doesn't make economic sense with both KXL and TMX under way.) It will triple the capacity of the existing Trans Mountain pipeline from Edmonton to Vancouver, which carries both crude oil (for export) and gasoline (for BC). In particular, it means that Canada will be able to export crude oil to refineries in Asia. Most of the new capacity is already booked for the next 15-20 years.

Alberta will get the bulk of the economic benefit (although not all, since the oil sands tend to push up wages across Canada), while BC gets the increased risk of an oil spill. It's true that Vancouver's already a busy commercial port, but people are concerned about the expected increase in tankers, basically from 1/week to 1/day.

Besides the risk of an oil spill, pipeline projects are strongly opposed by many people who are concerned about climate change. A common line: "Climate leaders don't build pipelines." (As a climate change voter myself, I think they're overlooking a critical point here. Trying to reduce global emissions by withholding supply seems like it should work, but it's actually ineffective, because oil-importing countries will just buy their oil elsewhere: If I buy all my groceries from my local Safeway, and it closes down, I won't starve. The price of oil won't even rise, because OPEC keeps the price of oil in a target range.)

Pipelines are under federal jurisdiction, and the federal government has to consider the interests of the country as a whole. The Trudeau government went ahead and approved the Trans Mountain expansion. A big reason was that the Alberta government, under Rachel Notley, was willing to support the national climate change plan: basically, there's a federal carbon price floor of $20/t rising to $50/t in 2022, which will reduce Canada's CO2 emissions by 20%. Each province can either do carbon pricing itself or the federal government will do a carbon tax and return the money to the province. With a carbon price, it's no longer free to dump fossil CO2 into the atmosphere, so this reduces demand for fossil fuels; unlike trying to withhold supply, this is effective in reducing emissions. Alberta's always been the main obstacle to climate policy, so this was a big deal.

The BC government (under Christy Clark) was initially opposed, but eventually came on board, after negotiating annual payments ($25 million/year) with the pipeline's owner, Kinder Morgan.

Consultation with First Nations is also a key legal question. In BC, unlike the rest of Canada, the First Nations never ceded their territorial claims by treaty. Northern Gateway was overturned by the courts because of failure to consult with First Nations. On TMX, there was more consultation (they learned from the failure of Northern Gateway), although it's still possible that the courts will rule it wasn't sufficient.

So even before the 2017 BC election, there was opposition to TMX. But the 2017 election resulted in a new government - an NDP minority supported by the Green Party, led by John Horgan - which was strongly opposed to the Trans Mountain expansion. They probably can't block it outright (because it's under federal jurisdiction), but they asked the Supreme Court to rule on the exact limits of their jurisdiction. Earlier this year they attempted to restrict any expansion of crude oil shipments, leading to a war of words with the Alberta government. (Did I mention that the BC government and the Alberta government belong to the same political party?)

From BC's point of view, Alberta is asking them to take on the increased risk of an oil spill, while Alberta gets the economic benefit. From Alberta's point of view, BC is trying to block Alberta's key export, at the exact same time that BC depends on Alberta's oil to run our fleet of gasoline-burning vehicles.

Eventually Kinder Morgan had had enough of the political uncertainty, and sought to get out. The federal government ended up buying both the existing pipeline and the expansion project. Their plan is to get it built, then sell it back to the private sector.

Trudeau's consistent argument has been that we can't ignore either the environment (unlike Harper) or the economic and political impact (unlike Horgan). He's taking a compromise position - carbon pricing to reduce fossil- fuel emissions and getting a better price for Canadian oil exports. Naturally, he's getting attacked from both sides.

It's a very Canadian political situation, with a large number of factors (federal government, provincial governments, national unity, exports to the US and Asia, the environment, First Nations, the courts), and Trudeau is taking a very Canadian position, aiming for a compromise. We'll see in 2019 if it works or not.

Hans Morgenthau on lack of humility

2018-09-30T00:00:00-07:00

The writers in the New York Review of Books don't pull their punches. One of my favorite examples is by Hans Morgenthau, reviewing W. W. Rostow's View from the Seventh Floor in the July 30, 1964 issue. The Sweet Smell of Success:

What is so disturbing and also fascinating in this book is exactly the contrast between the firm convictions and intellectual honesty of its author and the caricature it presents of its subject matter, the foreign policy of the United States. Mr. Rostow has a powerful, brilliant, and creative mind. How could such a mind produce such trash?

Morgenthau's explanation:

When an intellectual finds himself in the seat of power he is tempted to equate the power of his intellect with the power of his office. As he could mould the printed word to suit his ideas so he now expects the real world to respond to his actions. Hence his confidence in himself, his pride, his optimism; hence, also, the absence of the tragic sense of life, of humility, of that fear and trembling with which great statesmen have approached their task, knowing that in trying to mould the political world they must act like gods, without the knowledge, the wisdom, the power, and the goodness which their task demands.

Discouraging teenage marijuana use

2018-09-23T00:00:00-07:00

Chinese translation.

Parents are concerned about the legalization of marijuana in Canada. How can we protect our teenage children from using marijuana?

The basic problem is that people don't believe marijuana is dangerous. If they don't believe it's dangerous, even making it illegal doesn't help.

Consider cigarettes. Smoking has been steadily declining, even though it's legal, because of public education campaigns about the health risks of smoking: lung cancer, heart disease, and so on.

Among teenagers, marijuana usage is now higher than smoking, because even though marijuana is illegal, teenagers don’t believe that it’s dangerous, compared to smoking. In 2013, about 15% of BC high school students reported that they had used marijuana in the previous month. On the other hand, between 2001 and 2011, the number of 15 to 17 year olds who reported smoking tobacco in the previous month dropped from 19% to 10%.

Making marijuana illegal is ineffective. What we need is an ongoing public education campaign to convince teenagers that smoking marijuana regularly is a major health risk, because the developing brain is especially vulnerable - your brain continues to develop into your early 20s. In particular, smoking marijuana floods certain neuroreceptors in your brain with high quantities of THC, the active ingredient in marijuana. This causes them to work less effectively, and also causes toxic changes. To quote the Canadian Paediatric Society: "Structural changes on MRI have also been documented in youth who use cannabis regularly. They show lower brain volumes, different folding patterns and thinning of the cortex, less neural connectivity and lower white matter integrity, all of which indicate damage by THC."

The recommendations of the Canadian Paediatric Society include the following:

Fund public education campaigns to reinforce that cannabis is not safe for children and youth by raising awareness of the harms associated with cannabis use and dependence. These campaigns should be developed in collaboration with youth leaders and should include messages from young opinion-leaders.
Prohibit sales of all cannabis products to children and youth under the legal age for buying tobacco products and alcohol (18 or 19 years, depending on location).

Their recommendations for regulations to limit marketing of cannabis to minors include:

Mandate and enforce strict marketing and promotional standards, including a ban on all cannabis industry-related advertising and on the sponsorship of events, activities or permanent facilities by the cannabis industry.
Mandate package warnings for all cannabis products, including known and potential harmful effects of exposure (e.g., to young children and the fetus during pregnancy), similar to messaging on cigarette packaging.
Mandate and enforce a ban on the marketing of cannabis-related products using strategies or venues that attract children and youth, including (but not limited to) 'candy-like' edibles, 'giveaways' and promotion through social media.

Facts about marijuana legalization

Medical marijuana has been legal in Canada since 2001. Recreational marijuana becomes legal on October 17, 2018.

The legislation governing marijuana is C-45.
http://www.parl.ca/DocumentViewer/en/42-1/bill/C-45/royal-assent

C-45 includes the following statement of goals:

The purpose of this Act is to protect public health and public safety and, in particular, to

(a) protect the health of young persons [under 18] by restricting their access to cannabis;

(b) protect young persons and others from inducements to use cannabis;

(c) provide for the licit production of cannabis to reduce illicit activities in relation to cannabis;

(d) deter illicit activities in relation to cannabis through appropriate sanctions and enforcement measures;

(e) reduce the burden on the criminal justice system in relation to cannabis;

(f) provide access to a quality-controlled supply of cannabis; and

(g) enhance public awareness of the health risks associated with cannabis use.

Under C-45, selling or distributing marijuana to young people is illegal, punishable by either indictment (up to 14 years in prison) or summary conviction (up to 18 months), depending on the seriousness of the case. Possession of more than 30 g of marijuana (5 g for young people) is also illegal, punishable by either indictment (up to five years) or summary conviction (up to six months).

Cannabis can only be sold to adults in stores that are licensed by the provincial government. Packaging is restricted, with specific restrictions against packaging that would be appealing to young people. And it is illegal to promote or advertise cannabis except in places where young people are prohibited by law, like a bar.

In BC, landlords can prohibit their tenants from smoking marijuana and from growing marijuana. For existing rentals, growing marijuana is retroactively prohibited, and smoking marijuana is retroactively prohibited if there was a "no smoking" clause in the tenancy agreement. For new tenancies, it’s important to state these prohibitions explicitly in the tenancy agreement.
https://www.transpacificrealty.com/resources/blog/how-bcs-new-marijuana-laws-impact-landlords/

References:
https://www.macleans.ca/news/canada/the-right-and-wrong-way-to-legalize-cannabis/
https://www.cps.ca/en/documents/position/cannabis-children-and-youth

防止青少年使用大麻

2018-09-23T00:00:00-07:00

Translated from English by Lenny Nan Zhou. English version.

有些家長們對於加拿大大麻合法化感到擔憂。怎樣保護我們的孩子，使他們不使用大麻？

問題是大家不認為使用大麻是危險的，如果大家不認為使用大麻是危險的，即使將其視為非法也無濟於事。

例如吸煙，儘管吸煙是合法的，但是吸煙人數的比例在加拿大一直穩步下降，這是因為關於吸煙有害健康的公眾教育：吸煙能夠導致肺癌，心髒病等。

在青少年中，大麻的使用高於吸煙，因為即使之前使用大麻是非法的，與吸煙相比，青少年並不認為使用大麻是危險的。根據2013年在BC省的一項調查，有大概15％的高中生承認他們在過去一個月使用過大麻。另一方面，在2001年至2011年間，承認在過去一個月吸煙的15至17歲青少年的比列從19％下降到10％。

禁止使用大麻是不起作用的。我們需要的是長期的公眾教育活動，說服青少年吸食大麻會影響健康，因為發育中的大腦非常脆弱，有研究表明人的大腦會持續發育到20歲出頭。吸食大麻會使大腦中的某些神經受體充滿大量的THC，這是大麻中的主要成分。 THC能夠導致大腦中的神經受體不能有效地工作，甚至還會引起毒性變化。加拿大兒科學會研究表明：“對於經常使用大麻的年輕人，核磁共振顯示他們的大腦會出現結構性的改變，他們表現出較低的腦容量，不同的折疊模式和皮質變薄，較少的神經連接和較低的白質完整性，所有這些都是由於THC的破壞。”

加拿大兒科學會的建議還包括以下內容：

資助針對兒童和青少年的公共教育，通過提升公眾意識，加強大麻危害健康的宣傳。這些宣傳必須與青年領袖合作，包括來自於年輕意見領袖的信息。
禁止向法定年齡以下的兒童和青少年（18或19歲取決於所在地區）銷售所有大麻產品。

關於限制向未成年人銷售大麻的建議還包括：

授權並執行嚴格的營銷和宣傳標準，包括禁止所有與大麻行業相關的廣告，禁止大麻行業贊助活動或永久設施
對所有大麻產品的強制性包裝警告，包括暴露已知和潛在的有害影響（例如，在懷孕期間對幼兒和胎兒的不良影響），類似於在香煙包裝上的信息。
禁止吸引兒童和青少年的任何大麻相關產品的營銷策略或銷售場所，包括（但不限於）“糖果”食品，“贈品”和通過社交媒體的推廣。

關於大麻合法化的事實

自2001年以來，醫用大麻在加拿大一直合法。休閒大麻於2018年10月17日正式合法化。

管理大麻的立法是C-45。
http://www.parl.ca/DocumentViewer/en/42-1/bill/C-45/royal-assent

C-45法案包括以下目標陳述：

該法案的目的是保護公共健康和公共安全：

（a）通過限制他們獲取大麻來保護年輕人（18歲以下）的健康;

（b）保護年輕人和其他人不受大麻營銷的影響;

（c）規定合法生產大麻，以減少與大麻有關的非法活動;

（d）通過適當的製裁和執法措施，制止與大麻有關的非法活動;

（e）減輕與大麻有關的刑事司法系統的負擔;

（f）提供獲得質量控制的大麻供應;

（g）提高公眾對與使用大麻有關健康風險的認識。

根據C-45法案，向年輕人出售或分發大麻是非法的，根據案件的嚴重程度，可以通過起訴（最多14年監禁）或簡易程序定罪（最多18個月）予以處罰。擁有超過30克大麻（年輕人5克）也是非法的，可以通過起訴（最多5年）或簡易程序定罪（最多6個月）來處罰。

大麻只能在省政府許可的商店出售給成年人。大麻的包裝受到嚴格限制，嚴格禁止會吸引到年輕人的包裝。宣傳大麻是絕對違法的，除非在法律禁止未成年人出現的地方，如酒吧等。

在卑詩省，房東可以禁止房客吸食大麻和種植大麻。對於現有租賃，種植大麻是可以追溯禁止的。如果租賃協議中存在“禁止吸煙”條款，則房東可以追溯禁止吸食大麻。對於新租賃，重要的是在租賃協議中明確說明這些禁令。
https://www.transpacificrealty.com/resources/blog/how-bcs-new-marijuana-laws-impact-landlords/

參考文獻：
https://www.macleans.ca/news/canada/the-right-and-wrong-way-to-legalize-cannabis/
https://www.cps.ca/en/documents/position/cannabis-children-and-youth

Hobbes on starvation

2018-09-16T00:00:00-07:00

Hobbes argues that a government is responsible to keep its destitute citizens from starving to death. From Richard Tuck, Hobbes: A Very Short Introduction (1989).

... if the distribution of property works in such a way that people are physically endangered by it, and members of the commonwealth do not have access to the material necessities of life, then the sovereign is required to intervene and redistribute it; he must always ensure that everyone has at least the minimum necessary for survival. In Chapter 30 of Leviathan, Hobbes argues that the commonwealth must be responsible for the provision of maintenance to the destitute: "They ought not to be left to the charity of private persons; but to be provided for (as far forth as the necessities of Nature require), by the laws of the Commonwealth" (p. 387). A corollary of this, however, was that the sovereign must have the right to tax people to the level he thinks fit in order to protect the commonwealth: no "right of private property" can be pleaded against his actions, as had been argued during the Ship Money controversy.

... The vital point is that Hobbes's theory embodies the paradoxes of early or classical liberalism (and in this respect is not very different from, for example, John Locke's ideas). The primary responsibility of both citizens and sovereigns is to ensure the physical survival of themselves and their fellow citizens. Once this minimal requirement is met, policies should not be enforced upon the community - though that requirement in fact implies a considerable degree of state power. The 19th- or 20th-century exponents of laissez-faire in a sense took for granted the achievement of physical survival; for 17th-century liberals, both public order and a minimum level of subsistence were hard-won prizes. Nor should it be forgotten that it was only in Hobbes' lifetime that Western Europeans became more or less the first people in the history of our planet who could reasonably expect not to face devastating famine at some point in their lives.

Michael Ignatieff on the range of moral responsibility

2018-09-09T00:00:00-07:00

Michael Ignatieff observes in The Warrior's Honor (1998) that we have a range of moral obligations. They're strongest to those closest to us.

In practice, the claims of ethical universalism came to be strongly limited in Christian teaching and then in European natural law by the injunction that a rich man had a merely voluntary [and thus weaker] charitable obligation to strangers in need. In more general terms, a descending order of moral impingement came into place: the claims of kith and kin first, then neighbors, co-religionists, co-citizens, and only at the very end, the indeterminate stranger. To this day, the claim of the stranger - the victim on the TV screen - is the furthest planet in the solar system of our moral obligations.

That isn't to say that our obligations to the stranger are non-existent (which is why we have foreign aid, for example), just that they're much weaker.

This is what we mean by human rights - the rights that you have when everything else that would protect you (your family, friends, community) is stripped away.

George Washington on self-interest

2018-09-02T00:00:00-07:00

Hans Morgenthau quotes George Washington on the primacy of self-interest:

A small knowledge of human nature will convince us, that, with far the greatest part of mankind, interest is the governing principle; and that, almost, every man is more or less, under its influence. Motives of public virtue may for a time, or in particular instances, actuate men to the observance of a conduct purely disinterested; but they are not of themselves sufficient to produce persevering conformity to the refined dictates and obligations of social duty. Few men are capable of making a continual sacrifice of all views of private interest, or advantage, to the common good. It is vain to exclaim against the depravity of human nature on this account; the fact is so, the experience of every age and nation has proved it and we must in a great measure, change the constitution of man, before we can make it otherwise. No institution, not built on the presumptive truth of these maxims can succeed.

Source - letter from Washington on reforms to the Continental Army, written in January 1778 at Valley Forge.

The rogue in English literary tradition

2018-08-26T00:00:00-07:00

From the introduction to a 1968 edition of Thackeray's Vanity Fair (1848), by J. I. M. Stewart:

It is not, of course, that [Becky Sharp] exists in a moral vacuum. We are moral beings as we regard her, and from the first we feel a play of sympathy and repulsion at work. But the rogue who has only his wits to rely on, and who practises successfully and with elan upon folly, has always held in literary tradition a licence which must spring ultimately from our deep racial respect for the cunning which has seen us through our struggle with so many powerful, dangerous and disagreeable creatures.

Han Solo is a contemporary example of a rogue, although of course he's less morally ambiguous than Becky Sharp. He's a smuggler and outlaw who's recruited to a noble cause.

When I first came across this passage, I assumed Stewart was talking in poetic terms about England's struggles with Spain under the Hapsburgs and France under Louis XIV and Napoleon. On reflection, though, he's probably talking about lions, tigers, and bears.

Emotion

2018-08-19T00:00:00-07:00

Saw "Mission Impossible: Fallout" recently. It was a good movie, but it reminded me of this quote from Elmore Leonard's Get Shorty (1990):

"Anywhere along here's fine," Chili said, thinking of times he had been asked if he was guilty and not once ever having the urge to say he was. Real-life situations, even facing prison time, were never as emotional as movies. Cops got emotional in movies. He had never met an emotional cop in his life.

FDR's Four Freedoms speech

2018-08-12T00:00:00-07:00

Franklin Roosevelt's Four Freedoms speech, from January 1941.

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression - everywhere in the world.

The second is freedom of every person to worship God in his own way - everywhere in the world.

The third is freedom from want - which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants - everywhere in the world.

The fourth is freedom from fear - which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor - anywhere in the world.

Ambition

2018-08-05T00:00:00-07:00

Jack Vance, Trullion: Alastor 2262:

"... I've long felt a lack, or an emptiness. I want a weight to thrust my shoulder against; I want a challenge I can defy and conquer."

"Brave words," said Shira dubiously. "But -"

"But why should I so trouble myself? Because I have but one life, one existence. I want to make my mark somewhere, somehow. When I think of it I grow almost frantic! My foe is the universe; it defies me to perform remarkable deeds so that ever after folk will remember me! Why should not the name 'Glay Hulden' ring as far and clear as 'Paro' and 'Slabar Velche'? I will make it so; it is the least I owe myself!"

Jut said in a gloomy voice, "You had best become either a great hussade player or a great starmenter."

"I overspoke myself," said Glay. "In truth I want neither fame nor notoriety; I do not care whether I astonish a single person. I want only the chance to do my best."

There was silence on the verandah. From the reeds came the croak of nocturnal insects, and water lapped softly against the dock; a merling perhaps had risen to the surface, to listen for interesting sounds.

Jut said in a heavy voice, "The ambition does you no discredit. Still I wonder how it would be if everyone strove with such urgency. Where would peace reside?"

Death

2018-07-29T00:00:00-07:00

Jack Vance, The Book of Dreams (1981):

Navarth sat drinking wine with an aged acquaintance who bemoaned the brevity of existence. "I have left to me at the most ten years of life!"

"That is sheer pessimism," declared Navarth. "Think optimistically, rather, of the ten hundred billion years of death that await you!"

Everyone wants peace, right?

2018-07-22T00:00:00-07:00

E. H. Carr, The 20 Years' Crisis, 1919-1939: An Introduction to the Study of International Relations (1939), on the mistaken belief that everyone wants peace:

Politically, the [incorrect] doctrine of the identity of interests has commonly taken the form of an assumption that every nation has an identical interest in peace, and that any nation which desires to disturb the peace is therefore both irrational and immoral. This view bears clear marks of its Anglo-Saxon origin. It was easy after 1918 to convince that part of mankind which lives in English-speaking countries that war profits nobody. The argument did not seem particularly convincing to Germans, who had profited largely from the wars of 1866 and 1870, and attributed their more recent sufferings, not to the war of 1914, but to the fact that they had lost it; or to Italians, who blamed not the war, but the treachery of allies who defrauded them in the peace settlement; or to Poles or Czecho-Slovaks who, far from deploring the war, owed their national existence to it; or to Frenchmen, who could not unreservedly regret a war which had restored Alsace-Lorraine to France; or to people of other nationalities who remembered profitable wars waged by Great Britain and the United States in the past. But these people had fortunately little influence over the formation of current theories of international relations, which emanated almost exclusively from the English-speaking countries. British and American writers continued to assume that the uselessness of war had been irrefutably demonstrated by the experience of 1914-18, and that an intellectual grasp of this fact was all that was necessary to induce the nations to keep the peace in the future; and they were sincerely puzzled as well as disappointed at the failure of other countries to share this view.

The confusion was increased by the ostentatious readiness of other countries to flatter the Anglo-Saxon world by repeating its slogans. In the fifteen years after the first world war, every Great Power (except, perhaps, Italy) repeatedly did lip-service to the doctrine by declaring peace to be one of the main objects of its policy. But as Lenin observed long ago, peace in itself is a meaningless aim. "Absolutely everybody is in favor of peace in general," he wrote in 1915, "including Kitchener, Joffre, Hindenburg and Nicholas the Bloody, for every one of them wishes to end the war." The common interest in peace masks the fact that some nations desire to maintain the status quo without having to fight for it, and others to change the status quo without having to fight in order to do so.

Imagination

2018-07-15T00:00:00-07:00

Imagination is the ability to see things that aren't there.

An example from the classic cyberpunk novel Neuromancer (1984), by William Gibson:

Two blocks west of the Chat, in a teashop called the Jarre de Thé, Case washed down the night's first pill with a double espresso. It was a flat pink octagon, a potent species of Brazilian dex he bought from one of Zone's girls.

The Jarre was walled with mirrors, each panel framed in red neon. ...

He stared at the black ring of grounds in his empty cup. It was vibrating with the speed he'd taken. The brown laminate of the tabletop was dull with a patina of tiny scratches. With the dex mounting through his spine he saw the countless random impacts required to create a surface like that. The Jarre was decorated in a dated, nameless style from the previous century, an uneasy blend of Japanese traditional and pale Milanese plastics, but everything seemed to wear a subtle film, as though the bad nerves of a million customers had somehow attacked the mirrors and the once glossy plastics, leaving each surface fogged with something that could never be wiped away.

What is a norm?

2018-07-08T00:00:00-07:00

A factual statement - "The earth is round" - is true or false.

A normative statement - "You should not steal" - is different from a factual statement. A normative statement describes a rule for behavior: you should not do something (or more rarely, you should do something). This is the domain of ethics, morality, and law.

Without norms, life would be intolerable.

What can we say about norms? Why do people behave badly?

The political scientist Hans Morgenthau talks about how norms have two parts: the behavior described by the rule, and the sanction which occurs if you violate the rule. The sanction may be legal: the risk of being arrested and punished. It may be social: the risk of social condemnation and ostracism. Or it may be ethical: the guilt imposed by one's own conscience. Christoph Frei sums up: "'Thou shalt not steal' can be a command of ethics, mores, or the law. It is the sanction that differentiates these three types of rules of conduct."

Christoph Frei, writing in Hans J. Morgenthau: An Intellectual Biography (2001), pp. 135-137:

The psychic reality of a norm ... is founded on its "capacity to influence the will of the person it addresses" in the direction desired by the norm. But what enables the norm to have this effect? What will generally induce the person addressed by the norm to follow its prescription? Morgenthau argues that it is the fact that violation of the norm will have adverse consequences for the addressee: a penance, for instance, or a punishment, or simply remorse. More specifically, a norm will be followed if the adverse consequence threatened by the sanction for behavior in violation of the norm outweighs the advantage to be gained by acting in defiance of the norm.

... He concludes that it is not the content of the norm itself but the expectation of a sanction if the norm is violated - "a fear of displeasure" - that triggers the "stimulus of self-interest" in the person addressed by the norm and thus influences that person's behavior. If no sanction is expected, the norm has no psychically relevant reality, hence it lacks validity. It is "a mere idea, a wish, a suggestion, but not a valid rule." Thus, Morgenthau counters a "flawed positivist theory" with his own "realist" theory of validity: A norm is not valid just because it has been posited as such, but only once "its violation is likely to be followed by an unfavorable reaction," that is, once the expectation of such a reaction exists as a psychic reality in the person to whom the norm is addressed.

The sanction constitutes not only the conditio sine qua non for a norm's psychic reality but also determines its character. In other words, the distinction between law, mores, and morality as normative spheres lies, not in the content of a given rule, but in the modality of the sanction following upon the violation of that rule. "Thou shalt not steal" can be a command of ethics, mores, or the law. It is the sanction that differentiates these three types of rules of conduct.

Examples

What concerned Morgenthau was international law:

Karl Neumeyer, Morgenthau's teacher in Munich [in 1926 and 1927] had taught him that there was "no area in which the discrepancy between the content of the law and its actual impact on shaping reality [was] as marked and as predictable as in the field of international law."

... [Morgenthau's] most important conclusion can be summarized as follows: In contrast to the [domestic] order, the physical instruments for applying sanctions are not monopolized in the realm of international law; instead, they are decentralized. In fact, they are precisely in the hands of those to whom the norms relevant for maintaining peace are actually addressed, that is, the representatives of national governments. Obviously, these representatives will put their physical potential at the disposal of international law only when it furthers their respective interests of the day. Thus, the reality (effectiveness) of international law is completely dependent on constellations of power and national interest: "elle se trouve donc au plus bas degre de primitivité" - it is of the utmost primitiveness. "This reality depends almost exclusively and most often very directly on the will of the individual nations and their representatives, in other words, on those who are at the same time the subjects of international law."

The findings that Morgenthau had worked out theoretically in his Habilitation thesis were substantiated once again right after the publication of his research. Italy's war against Abyssinia (1935-1936) and the League of Nation's pathetic response to this aggression settled beyond a doubt whether "the theory that we have just proposed does or does not agree with the facts." Moreover, that crisis made it abundantly clear that for the time being one could not place much faith in legal norms and stipulations.

Another example (familiar to readers of Tintin) would be Japan's invasion of Manchuria in 1932. The League of Nations ordered Japan to withdraw from Manchuria. Instead, Japan left the League.

On the Internet, social norms are far weaker than in a face-to-face conversation. This results in a style of discussion which can be described positively as "freewheeling" and negatively as "a tidal wave of digital bile."

In The Hacker Crackdown: Law and Disorder on the Electronic Frontier (1992), Bruce Sterling describes the spectrum of computer-mediated communication, based on the degree of sanctions applied to the conversation:

Boards can be distinguished by the amount of effort spent in regulating them. First, we have the completely open board, whose sysop is off chugging brews and watching re-runs while his users generally degenerate over time into peevish anarchy and eventual silence. Second comes the supervised board, where the sysop breaks in every once in a while to tidy up, calm brawls, issue announcements, and rid the community of dolts and troublemakers. Third is the heavily supervised board, which sternly urges adult and responsible behavior and swiftly edits any message considered offensive, impertinent, illegal or irrelevant. And last comes the completely edited "electronic publication," which is presented to a silent audience which is not allowed to respond directly in any way.

Joseph Heath on Western self-confidence

2018-07-01T00:00:00-07:00

One of my favorite Joseph Heath quotes:

I happen to agree that some women who wear a niqab are doing it in order to engage in some kind of symbolic rejection or resistance to Western values. But here's the thing ... I don't care. I am completely unperturbed. I have lots of colleagues who go railing against "the West" and its values all the time. That doesn’t bother me either. Why? Because of my serene self-confidence as a Westerner. Simply put, I believe that the basic structure of liberal-democratic societies, which includes a market economy, welfare state, individual rights, electoral democracy, and separation of church and state, obviously and self-evidently dominates all known alternatives ("dominates" in this context means "is better in every respect"). The fact that people want to flail around a bit before accepting the inevitable is not something that troubles me very deeply. The ability to tolerate niqabs, hijabs, turbans, or whatever else people want to wear, is a sign of the profound strength of liberal democratic societies.

The parable of the tribes

2018-06-24T00:00:00-07:00

The Parable of the Tribes, by Andrew Schmookler, is a concise explanation of why power - the ability to get other people to do what you want them to do, instead of what they want to do - is inescapable:

Imagine a group of tribes living within reach of one another. If all choose the way of peace, then all may live in peace. But what if all but one choose peace, and that one is ambitious for expansion and conquest? What can happen to the others when confronted by an ambitious and potent neighbor?

Perhaps one tribe is attacked and defeated, its people destroyed and its lands seized for the use of the victors.

Another is defeated, but this one is not exterminated; rather, it is subjugated and transformed to serve the conqueror.

A third seeking to avoid such disaster flees from the area into some inaccessible (and undesirable) place, and its former homeland becomes part of the growing empire of the power-seeking tribe.

Let us suppose that others observing these developments decide to defend themselves in order to preserve themselves and their autonomy. But the irony is that successful defense against a power-maximizing aggressor requires a society to become more like the society that threatens it. Power can be stopped only by power, and if the threatening society has discovered ways to magnify its power through innovations in organization or technology (or whatever), the defensive society will have to transform itself into something more like its foe in order to resist the external force.

I have just outlined four possible outcomes for the threatened tribes: destruction, absorption and transformation, withdrawal, and imitation. In every one of these outcomes the ways of power are spread throughout the system. This is the parable of the tribes.

William McNeill on material abundance

2018-06-17T00:00:00-07:00

Historian William McNeill, concluding The Rise of the West: A History of the Human Community (1962):

... The secularist hopes and theories of the West which have won partial hold over men's minds all round the globe are remarkably generous ones. Like the ideals of earlier religions, they may yet demonstrate a staying power even in the face of repeated disappointment and failure. At the least, it is clear that men of nearly all nations, having once been exposed to the notions of liberty, equality, and fraternity, in any of the versions and with any of the accents which have been put upon these ideals, find them hard to forget and impossible to neglect. The vision of a free, well-fed, well-clothed, well-housed, and well-educated human being, member of a free and peaceable society, exerting his proportional share of influence to determine the mild and equable policies of "his" government, and himself contributing to the general welfare to the best of his abilities, holds a vast attraction for almost everyone. It has the further advantage that it may be vulgarized or specified in almost any manner to prescribe almost any line of conduct and appeal to almost any audience.

Persons who embrace the vision of future perfectibility of mankind enthusiastically find themselves wrestling with the appalling gap between ideal and reality. The gap is so wide that practical action in the imperfect world of fact may appear simply hopeless or else may seem to require such violent action against vested interests as to turn the pursuit of good into the perpetration of evil. Yet because it is not easily achieved, the secularized vision of a future heaven upon earth does not lose vibrancy. On the contrary, an ideal easily realized would soon lose its power to inspire action, whereas an unrealizable aspiration for which men must and will fight both asserts and in many cases reinforces its power amid the brutalities of battle. In the heat of such struggle, the standing discrepancy between ends and means will trouble only the most critical minds; and even they can never be sure that the end does not indeed justify what "has to be done."

Even a cursory consideration of the wars and revolutions, of the political and social reform movements, and of the activities of the great multitude of charitable, social service, welfare, and missionary agencies during the century since 1850 will show that many men have proved ready, even eager, to labor, to suffer, and if need be, to die in the struggle to bring the heavenly city to earth. Liberals, nationalists, socialists, and communists each have pursued their own version of the ideal on the political stage; and countless others each have have dedicated private efforts to the task of remodeling one or another corner of the social scene in the hope that, through the voluntary actions of innumerable individuals, a better approximation to the free, equal, and brotherly society of their dreams might in time be achieved.

The end is not yet, and cannot be foretold. Eventually men will no doubt turn away to pursue other visions; but in the meantime, however imperfectly the secular ideal of social bliss has come or ever will come to embodiment in human societies, it remains true that the universality and power of this vision among men of the late nineteenth and early twentieth centuries was a leading characteristic of the initial age of global cosmopolitanism.

Canadian politics ELI5

2018-06-10T00:00:00-07:00

Someone on /r/canadapolitics asked for an introduction to Canadian politics, at the ELI5 (explain like I'm five) level.

1. Taxation and public spending as collective shopping - Scarry

Okay, I'm going to start by taking you literally: The best explanation I've seen for five-year-olds is the story "Building a new road" in Richard Scarry's What Do People Do All Day?

In the story, two towns (Busytown and Workville) are connected by a unpaved, bumpy, dusty road. It's terrible. They decide they want to build a new one. So the mayors of the two towns show up in the office of a road builder, each carrying a sack of tax money, with an explanation of what they want. (The rest of the story, of course, is devoted to the mechanics of building a road, complete with illustrations of various earthmoving machines.)

A surprising amount of what governments do is along these lines. Some goods and services, like food, clothing, and housing, we buy individually. Others - roads, schools, health insurance, public pensions - we buy collectively, by pooling our money through taxes. These tend to be goods and services that are shared, and where most people need pretty much the same thing. A one-page explanation of the benefits from risk-pooling.

2. The monopoly on the legitimate use of violence - Hobbes

In Canada we tend to take our personal security for granted, but there's a lot of places in the world where violence is a big problem. Why is that? Why can't everyone just get along?

Historically, the philosopher who explained the problem is Hobbes. I like Andrew Schmookler's version of it: Imagine that you have a bunch of neighboring tribes living peacefully. As long as they're all peaceful, that's fine. But imagine that one of the tribes decides to conquer all the others by force. At that point the other tribes can submit (adding to the power of the conqueror), flee (making room for the conqueror to expand), or take up arms themselves and resist violently. No matter what they choose, power and violence spread through the system. It's inescapable.

Even slugs are territorial. They fight battles (at twice their normal speed) over territory.

So a major role of government is external security (diplomacy, trade, military) and internal security (police and emergency services).

Historically speaking, Canada is a successor-state of the British Empire. We're a pluralistic, multinational state, like the Austro-Hungarian Empire, incorporating both English- and French-speakers, Protestants and Catholics, from the very beginning. Perhaps this is why it's been relatively easy for Canada to integrate newcomers, compared to more monolithic societies.

Ultimately authority depends on consent. Canadians complain about taxes, but they pay them: the government doesn't need to send armed CRA agents to every household to collect taxes. Where people have strong grievances and consent is weak - with the First Nations, sometimes with Quebec - you can expect trouble.

(As an aside, it's human nature to resent other people's power over you, while feeling that one's own power over others is natural and just. Thus Canadians tend to resent American power, while dismissing the grievances of First Nations and Quebec nationalists: "Why are they always complaining?")

The big divide in international politics is between those powers which support the international status quo and those which oppose it. Generally speaking, Canada supports the international status quo - we have a strong interest in peace, stability, and trade - which is why Canada fought in World War I and II, opposed the Soviet Union during the Cold War, and why we're a member of NATO today. (The NATO treaty is a treaty of mutual defense: each member is committed to treating an attack on any member as an attack on itself. In particular, this commits the US to the defense of Europe against Russia.)

3. Rules and regulations

A great deal of economic and social life depends on norms - basically rules which define what you're not supposed to do, along with sanctions for violating them. These sanctions may be moral (you feel bad), social (you can be ostracized by other people), or legal (you may be caught and punished).

We rely on government to define and enforce the more technical and complicated rules: various forms of fraud, cheating, theft, pollution, cartels, and so on. As well as the more obvious ones, like assault, rape, murder, and so on.

We also rely on government, specifically the court system, to arbitrate when there's a dispute, e.g. when two side have a contract and one of them decides to break it. (Criminals can't rely on this arbitration service, so they tend to resort to violence instead.)

4. Federal and provincial jurisdiction

The provinces run education and health care. That's most of what you need to know.

5. Political parties

Finally we get to the political parties.

Canada's a democracy, which means that power is transferred through elections (counting heads) rather than through violence (breaking heads). The country is divided into about 300 geographic areas called ridings; each riding has about the same number of voters. When there's an election, a number of candidates stand in each riding, and the voters there decide which candidate will be their representative ("Member of Parliament").

So what are the parties for?

In my experience, if you talk to four different individuals about their political opinions, you'll get four completely different views about what the government should be doing differently. In a democracy, you need some way to align all of these conflicting views, so that you can make collective decisions. I think of political parties (and political leaders) as playing a key role here: they come up with a platform that people can either support or oppose, depending on how attractive it is.
Political parties also serve to protect against wholly unsuitable candidates. Political scientists describe the US as having strong partisanship, but weak political parties; the Republican Party was too weak to stop Trump from claiming the presidential nomination.
Finally, political parties provide the opportunity for mass political participation on an ongoing basis, so that we're not just passive spectators who only participate by voting at election time. The parties are always looking for volunteers.

In a democratic system, power is based on mass participation: each election is like a tug-of-war, where each individual contribution may seem insignificant, but the cooperation of all the people on each side gives it tremendous power. The parties are a way for like-minded people to cooperate with each other.

So what do the parties stand for? Boiling it down to slogans:

Conservatives - lower taxes, smaller government
Liberals - good government
NDP - justice for the oppressed, support for workers

Joseph Heath has a more detailed explanation of the difference between left (NDP), right (Conservatives), and centre (Liberals).

Global warming: science, policy, politics

2018-06-03T00:00:00-07:00

Since my back-and-forth with John Robson three years ago, I've been continuing to argue with people about global warming. Here's my attempt to summarize the science, policy, and politics.

1. What's happening

No matter how complicated the Earth's climate is, we know that it can't violate conservation of energy.

In terms of energy, the Earth is basically a system with one input (a steady stream of solar energy) and one output (thermal radiation). A warm object radiates thermal energy into space, the same energy that you feel when you hold your hand over a hot stove. And a warmer object radiates more energy than a cooler one.

So the Sun warms the Earth to the temperature where incoming energy = outgoing energy.

By digging up and burning fossil fuels, we're raising CO2 levels in the atmosphere. Because CO2 reduces outgoing thermal radiation, input is greater than output, and so additional energy accumulates. It's like filling a bathtub; you don't need fancy models to see what's going to happen next.

We can get a sense of the scale of the process in this graph, from Wikimedia: the Earth's enormous, so it takes a huge amount of energy to increase its temperature, and we can see from post-1978 satellite measurements that the Sun's not getting any brighter.

Looking at a more detailed view, we can see extreme heat waves which would not have occurred without global warming. In 2003, for example, there was a heat wave in Europe that killed more than 70,000 people.

These maps are constructed as follows: Divide the surface of the Earth into equal areas, using a resolution of 250 km. For each area, find the average June-July-August surface temperature, from 1951 to 1980. Use this to define a probability distribution. Measure the standard deviation of the distribution. For any given year, the areas for which the average summer temperature is more than three standard deviations from the mean should cover only 0.1-0.2% of the planet. We can see that these areas - the large brown patches - are now covering between 6% and 11% of the planet!

If this is such a big problem, why haven't we done anything about it? The 1992 business-as-usual CO2 projection vs. actual CO2 levels:

The answer is that cooperation is surprisingly difficult, even in the face of a clear threat. It's an example of a collective action problem: the costs of acting are borne by the individual, while the benefits are spread across everyone, so everyone tends to free-ride and point fingers at others. It's a problem of individual incentives, not lack of awareness.

2. What we should do

Basically, we need to electrify everything, including transportation and heating; and generate much more electricity without using fossil fuels (hydro, nuclear, wind, solar).

We know that replacing the existing fossil-fuel-based infrastructure will be very costly. If you talk to economists, they're pretty much unanimous: the most cost-effective way to accelerate the transition away from fossil fuels is to use a steadily rising price on carbon, basically a sales tax on fossil fuels, with the revenue used to reduce income taxes. Since it's no longer free to dump fossil CO2 into the atmosphere, this gives individual households and businesses a direct incentive to reduce their fossil fuel usage. Joseph Heath explains the details.

British Columbia has had a carbon tax like this since 2008. It turns out the net economic cost is nearly zero: The increased drag from the carbon tax is almost exactly offset by the reduced drag from income taxes. Paul Krugman explains the basic idea.

A carbon price - as opposed to quotas - is also the most effective way to coordinate action internationally. Quotas are zero-sum: more for me means less for everyone else, so it's nearly impossible to come to agreement on how they can be allocated fairly. It should be far easier to agree on a common price. William Nordhaus explains the advantages of agreeing on a common price instead of trying to allocate emission reductions.

The IEA has worked out the carbon price path required to stabilize CO2 levels at 450 ppm: $20/t in 2020, $100/t in 2030, $140/t by 2040.

Once CO2 levels are stable, it'll take about ten years for temperatures to stop rising.

Canada's actively pursuing this approach, with a minimum carbon price of C$10/ton in 2018, rising $10/t each year to $50/t in 2022. We have a self-interested reason to do so: we export oil (in fact the federal government just took over a pipeline to export oil to Asia instead of the US), and the Canadian oil sands are being targeted by the environmental movement - they're too big to stay out of the spotlight.

Canada's argument is that we're doing our part to reduce our demand for fossil fuels, using carbon pricing, and that this makes more sense than trying to withhold supply by preventing the oil sands from expanding. If we block off one source of supply without reducing demand, it's like trying to fight obesity by blockading a McDonald's. If the idea is that reducing supply will drive up the price of oil, a better approach is to use carbon pricing to raise the price directly.

3. How to get people to do it

At the national level, we can use carbon pricing to align people's incentives. But that doesn't answer the question of why a particular national government would seek to act, rather than free-riding and putting their political capital into other issues.

It's difficult to generalize, because it's going to depend on the political context in that particular country. In Canada, for example, the Harper government's approach was to do nothing, and to accept or even deepen polarization (muzzling government scientists, withdrawing from Kyoto). Harper figured that he just needed 40% of the voters on his side, and having 60% of the country be angry at him might even be helpful. Trudeau's approach, on the other hand, is to take a compromise position: use carbon pricing to reduce demand for fossil fuels, and continue shipping oil. Naturally he gets attacked from both sides, but he believes that he can get most Canadians to accept this compromise.

If a country doesn't happen to have a confluence of political interests which line up in favor of action, it may be possible to use diplomacy. Hans Morgenthau describes the three elements of diplomacy - how to get another country to do what you want - as persuasion, compromise, and threats. (Machiavelli's History of Florence: "It is customary with those who wish to obtain a favor, to make use either of prayers, presents, or threats, that pity, convenience, or fear, may induce a compliance with their requests.")

For example, William Nordhaus's most recent proposal is a climate club, giving reluctant countries a direct incentive to act based on tariffs.

In addition, my guess is that whenever there's an extreme weather event, people will put a great deal of pressure on their own government to do something.

A major non-governmental factor is the environmental movement. On the one hand, environmentalists have raised awareness of climate change, putting pressure on governments to act, and the Sierra Club has been leading a successful campaign to shut down coal-fired power plants for economic reasons. On the other hand, environmentalists are often criticized for attacking supply-side projects, like the Keystone XL pipeline, rather than trying to push for more abstract demand-side policies like carbon pricing. David Roberts explains the logic: it's simply easier to get people in the streets to protest against a pipeline. "It is true that each individual fossil fuel project is only a tiny contributor to the totality of climate change. But the industry as a whole is a high-functioning, high-earning, high-influence death machine that is driving civilization toward disaster, knowingly so. Some sand has got to be thrown in the fucking gears." In some ways that feels like giving up on policies like carbon pricing, and resorting to targeting a scapegoat for its symbolic value.

If the multilateral, cooperative, orderly approach doesn't work out, the emergency fallback is geo-engineering.

Machiavelli on foresight

2015-08-22T00:00:00-07:00

In The Prince, Machiavelli writes:

... the Romans did in these instances what all prudent princes ought to do, who have to regard not only present troubles, but also future ones, for which they must prepare with every energy, because, when foreseen, it is easy to remedy them; but if you wait until they approach, the medicine is no longer in time because the malady has become incurable. For it happens in this, as the physicians say it happens in hectic fever, that in the beginning of the malady it is easy to cure but difficult to detect, but in the course of time, not having been either detected or treated in the beginning, it becomes easy to detect but difficult to cure.

This it happens in affairs of state, for when the evils that arise have been foreseen (which it is only given to a wise man to see), they can be quickly redressed, but when, through not having been foreseen, they have been permitted to grow in a way that every one can see them, there is no longer a remedy.

American security and the balance of power

2015-05-03T00:00:00-07:00

American security depends on the balance of power in Europe and Asia. If a single power were able to dominate the continent (France under Napoleon, Germany under Wilhelm II or Hitler, the Soviet Union), it would also be strong enough to threaten the US.

As Jefferson put it: the enduring interest of the US lies in preventing the entire force of Europe from being wielded by a single hand.

George F. Kennan, American Diplomacy 1900-1950 (1951):

Today, standing at the end rather than the beginning of this half-century, some of us see certain fundamental elements on which we suspect that American security has rested. We can see that our security has been dependent throughout much of our history on the position of Britain; that Canada, in particular, has been a useful and indispensable hostage to good relations between our country and British Empire; and that Britain's position, in turn, has depended on the maintenance of a balance of power on the European Continent. Thus it was essential to us, as it was to Britain, that no single Continental land power should come to dominate the entire Eurasian land mass. Our interest has lain rather in the maintenance of some sort of stable balance among the powers of the interior, in order that none of them should effect the subjugation of the others, conquer the seafaring fringes of the land mass, become a great sea power as well as land power, shatter the position of England, and enter--as in these circumstances it certainly would--on an overseas expansion hostile to ourselves and supported by the immense resources of the interior of Europe and Asia.

Hence the enduring US alliances with NATO (especially Britain) and Japan.

Conservation of energy

2015-05-02T00:00:00-07:00

A few days after my latest post, John Robson hadn't responded, so I asked on Twitter whether I'd persuaded him that CO2 traps heat. He replied:

In a jar, sure. Have I persuaded you the climate is a lot more complicated than a jar?

I was hoping for a little more than that, but if John's willing to say that CO2 in a jar traps heat, I suppose that's progress. It's pretty simple: CO2 is transparent to visible light, but blocks thermal radiation. This is a physical property of CO2 as a gas. It doesn't matter whether it's in a jar or in the earth's atmosphere (or Venus's atmosphere, or wherever), it's going to behave the same way.

Okay, let's move on to climate. What do we know about the earth's climate?

Thermal radiation and equilibrium temperature

Like the other planets in our solar system, the earth receives a continuous flow of energy from the sun, as visible light. Why doesn't the earth just keep heating up until it's as hot as the sun? Fourier asked and answered this question back in 1824: a warm object emits invisible (infrared) thermal radiation. The planet emits thermal radiation into space which is equal to the incoming solar energy, so the planet neither warms up nor cools down.

What happens if the incoming solar energy increases? The key principle is that a warmer object emits more thermal radiation. The planet will gradually warm up until the outgoing radiation balances the incoming solar energy again. Conversely, if the incoming solar energy decreases, the planet will gradually cool down, and its outgoing radiation will decrease.

For a given level of solar energy, we can calculate the equilibrium temperature at which the incoming and outgoing energy will balance. An example calculation. The key factors in the calculation are:

The temperature of the sun.
The distance from the sun to the earth.
The size of the earth.
The reflectiveness of the earth's surface ("albedo").

Finally, there's the composition of the earth's atmosphere. Without the atmosphere, the earth would be much colder than it actually is. Because the earth's atmosphere blocks some of the outgoing thermal radiation, the temperature where the earth emits enough thermal radiation to balance the incoming solar energy is higher than with no atmosphere (by about 33 degrees Celsius, assuming the earth reflects 30% of incoming light).

If these factors (including atmospheric composition) are stable, then the average temperature of the earth must also be stable. Heat can be redistributed within the system (for example, the oceans can absorb heat or release it, as in El Nino years), but because of the law of conservation of energy, we know that the overall amount of energy in the system can't change.

Changes in the energy balance

What can cause the energy balance to change?

Variations in the sun's output. For example, astronomers have monitored sunspots for a long time, so we know that there was a period from about 1645 to 1715 when sunspots (correlated with solar output) were very rare; it's called the Maunder Minimum. This was also the middle of the Little Ice Age. Now we use satellites to measure solar output, and we can see that there's a variation of about 0.1% in solar energy over an 11-year cycle.
Very slow and regular variations in the amount of solar energy reaching the earth's surface due to variations in the earth's orbit ("Milankovitch cycles"), over tens of thousands of years.
Changes in the reflectiveness of the earth's surface, e.g. as glacial ice sheets grow or melt over long periods of time. As ice sheets grow, the earth reflects more light back into space instead of absorbing it, causing cooling.
Changes in the composition of the atmosphere, which blocks outgoing thermal radiation. Volcanic activity releases CO2 from molten rock, raising the equilibrium temperature. (Volcanic eruptions also cause short- term cooling by injecting sulfates into the air.) This is balanced by a very slow process called rock weathering, which takes place over millions of years and turns CO2 into limestone.

Over very long periods of time in the past, we can see that these factors have resulted in dramatic changes in the earth's climate; this is the field of paleoclimate, and it's a fascinating story. (If you're interested, Spencer Weart describes the major discoveries. Lectures from the University of Michigan summarizing what we know about paleoclimate.)

But over the next century or so, a geologically short period of time, we're not going to see sudden changes caused by variations in the sun's output, or by Milankovitch cycles, or by changes in the reflectiveness of the earth's surface, because these factors aren't changing rapidly.

Of course, what is changing rapidly is the composition of the atmosphere. We're currently digging up and burning fossil fuels, releasing huge quantities of CO2 into the atmosphere, exactly as if we were a super-volcano. Since 1750, we've released over 300 billion metric tons of carbon into the atmosphere, and we're still going. We know that CO2 blocks outgoing thermal radiation (traps heat), and therefore the earth's temperature must rise in order to emit more thermal radiation. Until it reaches equilibrium again, there will be more energy coming in than going out.

For a given increase in the level of CO2, what will the equilibrium temperature be? Skeptical Science summarizes the multiple lines of evidence:

Climate sensitivity [the change in equilibrium temperature resulting from doubling CO2, or equivalently from increasing solar energy by 3.7 watts per square metre] can be calculated empirically by comparing past temperature change to natural forcings at the time. Various periods of Earth's past have been examined in this manner and find broad agreement of a climate sensitivity of around 3°C.

How stable is the earth's climate?

John argues at length that the earth's climate is not stable, and can change abruptly and unpredictably:

I have never said the climate is stable. On the contrary, in writing about global warming over more than a decade I have insisted that the climate is so remarkably unstable that it cannot be mathematically modeled at all. It is, technically, "non-linear" and in an age committed to the proposition that linear algebra can explain everything from chemistry (mostly true) to economics (wildly false) we generally assume without reflection that it can also explain climate.

Not so. And it is not me, but the alarmists with their “hockey stick” that shows a very stable global temperature until the 20th century, who would have you believe everything was orderly and harmonious until human wrongdoing expelled us from a temperate Eden into a lake of fire.

And:

... [The alarmists] cannot even explain what has caused dramatic swings in the Earth’s climate in the past when increasing CO2 concentrations appear to be an effect not a cause. Nor can they explain why in the past once CO2 levels had risen we did not get a "greenhouse" effect instead of warming trends suddenly and unpredictably reversing and resuming despite the alarmists’ models suggesting bleak stability.

And:

... look again at his chart of temperature changes over the past 400,000 years. Notice the endless abrupt changes.

What makes him think we're not just in one of those now? Again, it is not science to suggest that although the Earth’s climate has witnessed an uncountable number of sudden drops or rises in temperature for natural reasons, the one we're now in, if we are, cannot be of that sort and must be an entirely new kind where CO2 is suddenly and unaccountably driver not passenger.

My response is simple: no matter what we know or don't know about past changes in the earth's climate (and we actually know quite a lot), we know for certain that the earth's climate cannot violate the law of conservation of energy! We know that CO2 traps heat, so we know that there's more solar energy coming in than thermal radiation going out, and therefore there's more energy being trapped in the system as a whole.

That's why scientists were able to predict back in the late 1980s that temperatures would rise. And that's also why scientists are so alarmed about our inaction on global warming. This tweet summarizes it perfectly:

Scientists: Don't freak out about Ebola. Everyone: *Panic!* Scientists: Freak out about climate change. Everyone: LOL! Pass me some coal.
— Emm Kay (@emmkaff) August 7, 2014

I don't expect my argument to convince John that global warming is a real problem, but I'm interested in seeing how he reconciles the law of conservation of energy with his belief that the earth's climate is unstable and unpredictable. (No matter how unstable and unpredictable it is, it can't destroy incoming energy!) If he responds, I'll add a link to his reply.

Next: How do we deal with the collective action problem? (As I've said before, fossil fuels are awesome; if they weren't, it'd be a lot easier to stop using them.) And if the scientists really do know what they're talking about, how bad do they think it's going to get?

CO2 is a greenhouse gas

2015-04-03T00:00:00-07:00

John Robson has kindly replied to my comment on his surprising IRPP post.

I'll try to keep it brief.

1. CO2 is a greenhouse gas

John asks how we know that atmospheric CO2 traps heat:

We cannot measure directly how atmospheric CO2 traps heat. How would we? You can't put a thermometer in the Earth's mouth. We can't build a series of otherwise identical Earths and release different amounts of CO2 into their atmospheres. What direct measurement does he have in mind?

It's a physical property of CO2 as a gas, which we can measure directly. You take a vessel with CO2 in it, shine infrared radiation through it, and measure the absorption.

Our knowledge that CO2 in the atmosphere traps heat isn't dependent on models of the climate, or surface temperature measurements, or reconstructions of past temperature records. We can measure it directly.

Spencer Weart's The Discovery of Global Warming has the details, going back to John Tyndall's measurements of heat absorption by various gases (including CO2) in 1859 and 1860.

Also: we have satellite measurements of infrared radiation leaving the earth, going back to 1970, and we can see that CO2 and other greenhouse gases in the atmosphere are trapping more and more thermal radiation. (We can see that there's a drop in the specific parts of the spectrum where CO2 absorbs radiation.)

So yes, CO2 is a greenhouse gas.

2. Sources of information

For anyone who wants to catch up on the scientific view of climate change, The Discovery of Global Warming and Skeptical Science are both excellent resources.

For readers who find any information provided by "alarmists" such as myself to be dubious, you may find Richard Lindzen more credible. He's not an "alarmist," but a prominent skeptic: according to the New York Times, "When he appears at conferences of the Heartland Institute, the primary American organization pushing climate change skepticism, he is greeted by thunderous applause."

Lindzen and Choi (2011) explain how greenhouse gases work:

The heart of the global warming issue is so-called greenhouse warming. This refers to the fact that the earth balances the heat received from the sun (mostly in the visible spectrum) by radiating in the infrared portion of the spectrum back to space. Gases that are relatively transparent to visible light but strongly absorbent in the infrared (greenhouse gases) interfere with the cooling of the planet, forcing it to become warmer in order to emit sufficient infrared radiation to balance the net incoming sunlight (Lindzen, 1999). By net incoming sunlight, we mean that portion of the sun's radiation that is not reflected back to space by clouds, aerosols and the earth's surface. CO2, a relatively minor greenhouse gas, has increased significantly since the beginning of the industrial age from about 280 ppmv to about 390 ppmv, presumably due mostly to man's emissions.

And:

It is generally accepted that in the absence of feedback, a doubling of CO2 will cause a forcing of [approximately] 3.7 Wm-2 and will increase the temperature by [approximately] 1.1 K (Hartmann, 1994; Schwartz, 2007).

Rephrasing: doubling atmospheric CO2 is equivalent to increasing the solar energy reaching the earth's surface by 3.7 watts per square metre. Without calculating feedbacks (e.g. a warmer atmosphere holds more water vapor, and water vapor is also a greenhouse gas), we would see a temperature increase of 1.1 degrees C.

3. Next steps in the argument

So far the line of reasoning looks like this:

Atmospheric CO2 traps heat. We can measure this directly.
We can directly measure the level of CO2 in the atmosphere and see that it's steadily increasing.
Thus we can expect the amount of heat trapped by the atmosphere to increase over time.

But of course the next question is: How much of an effect will it have on the climate? What's the magnitude? What makes Lindzen a skeptic is that he thinks the resulting change in temperature won't be enough to be dangerous. Based on his calculations (presented in Lindzen and Choi 2011), he thinks doubling CO2 will result in a temperature increase of 0.6 or 0.8 degrees C.

If we accept the line of reasoning so far, the next argument is:

Yes, we can expect increasing CO2 to trap more heat.
But it won't cause enough of an increase in temperature to be dangerous. Perhaps it'll be tiny compared to natural variation.

Before continuing, I'll pause to give John some time to respond. After that, I'll go into what we know about the climate (e.g. feedbacks) and the expected increase in temperature from increasing CO2. Would we expect the increase in temperature to be dangerous, or not? As John says in his post, there's lots of issues here to discuss: complexity of the climate, sources of natural variation such as solar activity, accuracy of temperature measurements, what we know about past climate change, dealing with feedbacks, causes vs. effects.

Thanks to John for taking the time to respond to my initial comment!

Louis Halle on power vs. force

2015-04-02T00:00:00-07:00

Louis Halle, The Cold War as History (1967):

... real power is always something far greater than military power alone. A balance of power is not a balance of military power alone: it is, rather, a balance in which military power is one element. Even in its crudest aspect, power represents a subtle and intimate combination of force and consent. No stable government has ever existed, and no empire has ever become established, except with an immensely preponderant measure of consent on the part of those who were its subjects. That consent may be a half-grudging consent; it may be a consent based in part on awe of superior force; it may represent love, or respect, or fear, or a combination of the three. Consent, in any case, is the essential ingredient in stable power--more so than physical force, of which the most efficient and economical use is to increase consent.

By using physical force in such a way as alienates consent one constantly increases the requirements of physical force to replace the consent that has been alienated. A vicious spiral develops that, continued, ends in the collapse of power.

John Robson on global warming

2015-03-29T00:00:00-07:00

If you didn't know anything at all about the shape of the earth, and you just looked around you, how could you tell that the earth isn't flat? You can't see the curvature of the earth, so it's natural to think of the earth as a flat circle supporting the sky, as ancient peoples did. (It was the Greek natural philosophers who figured out that the earth is in fact a sphere.)

Similarly, it's natural to think that the earth's climate is stable. It may be colder one year and warmer the next year, but it seems implausible to imagine that it's going to get steadily warmer.

One of the Canadian think tanks I follow is the Institute for Research on Public Policy. I was surprised to see a recent blog post arguing that the scientific debate on man-made global warming isn't over yet. John Robson:

So apparently the scientific debate ended with the discovery that a warming process that has been going on for over 300 years was not man-made for the first 250 but has been since, and a cycle of warming and cooling going on for 3000 years was not man-made for the first 2950 but has been since. And don’t even get me started on that 800,000 year cycle, or what happened in the Jurassic, or the pattern since the “Cambrian explosion”. See, there’s no debate, nothing to see, just this odd business where the physical processes driving climate change for over 500 million years were suddenly replaced with a different set 50 years ago for reasons no one can explain.

Robson's sarcasm aside, let's take the question seriously: when did the scientific debate on global warming end?

In science, you always want to keep Cromwell's rule in mind: "I beseech you, in the bowels of Christ, think it possible that you may be mistaken." Scientific theories are always provisional: you can never prove a scientific hypothesis, you can only disprove it. Even when a theory is generally accepted, new evidence can overturn it (Newton's laws turn out not to apply at quantum scales or relativistic speeds). But when you're looking at the steady stream of new scientific discoveries, you want to distinguish between those that overturn major theories (which happen extremely rarely) and those that can easily be fitted into them, perhaps with some refinements.

Also note that even eminent scientists may refuse to accept new developments-- Einstein famously rejected the randomness of quantum mechanics, saying that "God does not play dice with the universe."

So, bearing in mind that there will always be a few skeptics, when did scientists understand that burning fossil fuels was going to cause major changes to the climate?

The logic isn't hard to understand:

Atmospheric CO2 traps heat. We can measure this directly.
We can directly measure the level of CO2 in the atmosphere and see that it's steadily increasing.
Thus we can expect the amount of heat trapped by the atmosphere to increase over time.

There's a phenomenon called the illusion of explanatory depth, where we think that because we're familiar with something, we understand it--until we try to sit down and explain it step by step. My question to global-warming skeptics is always: Can you explain (step-by-step) how increasing CO2 is not going to result in global warming?

Returning to Robson's question, the key discoveries (described in detail in Spencer Weart's "The Discovery of Global Warming") were:

CO2 traps heat--Gilbert Plass, 1956.
Measurement of atmospheric CO2--Charles Keeling, starting in 1958.
Temperature and atmospheric measurements for the last 400,000 years, extracted from Antarctic ice cores--published in 1985. These show that atmospheric CO2 had cycled between 180 parts per million (during the coldest periods) and 280 ppm (during the warmest periods). In the 1980s, CO2 had reached 350 ppm, and was still rising. It was clear that we're putting the atmosphere through changes that previously only happened over geological timescales.

So the scientific debate was over by the late 1980s. After that, there were still skeptics within the scientific community (Richard Lindzen, for example), but as evidence piled up that warming was occurring, and as paleoclimatologists continued to reconstruct past climate records, they became increasingly rare.

You would have to go back at least 15 million years to find carbon dioxide levels on Earth as high as they are today, a UCLA scientist and colleagues report [October 8, 2011] in the online edition of the journal Science.

"The last time carbon dioxide levels were apparently as high as they are today — and were sustained at those levels — global temperatures were 5 to 10 degrees Fahrenheit higher than they are today, the sea level was approximately 75 to 120 feet higher than today, there was no permanent sea ice cap in the Arctic and very little ice on Antarctica and Greenland," said the paper's lead author, Aradhna Tripati, a UCLA assistant professor in the department of Earth and space sciences and the department of atmospheric and oceanic sciences.

Robson also asks about how the climate changed in the past, before we started burning fossil fuels. The answer is, Milankovitch cycles. Skeptical Science is a good resource for anyone interested in patient dissection of skeptical arguments:

Scientists have shown that CO2 and climate moved in lock-step throughout the Pleistocene ice ages. The ice ages were actually many pulses of cold glacial phases interspersed with warmer interglacials. These pulses had a distinct regularity caused by wobbles in Earth’s orbit around the Sun (Milankovitch cycles). When Earth’s orbit reduced the intensity of sunlight in the northern hemisphere, the Earth went into a glacial phase. When the orbital cycle increased the intensity of insolation in the northern hemisphere, ice sheets melted and we went into a warm interglacial. Because warmer oceans can dissolve less CO2, the CO2 levels see-sawed extremely closely with Earth’s temperature. It was a slow pace of change, taking tens to hundreds of thousands of years, and yes..., in the last million years the biggest orbit-induced cycles were every 100,000 years.

But we know these orbital changes are not behind today's global warming. In fact our orbit dictates we should be cooling now, not warming.

The Earth was indeed cooling over the last 6,000 years due to Earth's orbit, heading into the next glacial phase scheduled for about the year 3500 AD. But all that changed when we got to the industrial era. Global temperatures departed from that cooling trend, and instead rose parallel with our greenhouse gas emissions.

The question of what policy we should follow--what should we do about increasing greenhouse gases?--is of course a completely separate question. Fossil fuels are awesome (Mark Jaccard describes them as "concentrated sunlight"), which is why they're so hard to give up.

Joseph Heath describes this as a collective action problem:

"I think everyone can understand free rider problems, but almost no one bothers to think of the world in that way."

Sad but true. One of the things I’m constantly amazed by in discussions over climate change is how elusive the basic concept of a collective action problem remains, and how unintuitive it is for many people (whether to grasp, or just to apply, as James suggests). I know that I certainly didn’t “get it” right away. I had been told the story of the Prisoner’s Dilemma several times before I realized that it was not just a little puzzle, but in fact a very big deal. (Probably reading Russell Hardin’s book, Collective Action, is what caused the heavens to open for me. Or perhaps David Gauthier’s Morals by Agreement.)

Anyhow, since that time, seeing the world in terms of collective action problems has become such second nature to me that I have increasing difficulty imagining what it would look like in any other terms, and thus, I have difficulty believing that anyone still fails to see it in those terms. I teach the Prisoner’s Dilemma, the Tragedy of the Commons, and all the basic stuff about collective action problems, every year in my classes. And yet I feel intensely self-conscious every time I do, figuring that what I’m saying is so obvious that I’m boring most of the students. (I usually preface my little lecture with an apology to all those who have heard the basic line before.)

And yet, the other day I was reading this little book by Naomi Oreskes and Erik M. Conway, The Collapse of Western Civilization, and they totally don’t get it. The book is all about climate change, and yet the concept of it being a “collective action problem” just doesn’t show up. Thus they express complete bewilderment over the fact that we might all know that outcome x is undesirable, and yet fail to act to avoid outcome x. So they wind up getting stuck on the dilemma that so many environmentalists wind up stuck on, when it comes to explaining our inaction: either 1. it must be the fault of scientists, for somehow failing to communicate effectively how bad x is going to be, or 2. there must be some “ideology” that holds us prisoner, preventing us from acting.

If you don't understand collective action problems, you get this kind of dynamic:

“Outcome x is really bad, and our doing y is making it worse. We should all stop.”

Time passes

“Nothing happened. People are still doing y, and we’re still getting outcome x. How could that be?”

“It must be that they don’t understand how bad outcome x is going to be. Guys! Outcome x is going to be REALLY BAD, don’t you get it?

Time passes

“Nothing happened. People are still doing y, and we’re still getting outcome x. How could that be?”

“It must be that they don’t understand how bad outcome x is going to be. Guys! Outcome x is going to be a FUCKING CATASTROPHE, don’t you get it?

Time passes

“Nothing happened. People are still doing y, and we’re still getting outcome x. How could that be?”

“It must be that they don’t understand how bad outcome x is going to be. Guys! Outcome x is going to be the END OF WESTERN CIVILIZATION, don’t you get it?"

Time passes

“Nothing happened…”

Repeat ad infinitum….

Another article by Joseph Heath which goes into more detail: It's Not Easy Being Green.

Checking the reliability of information

2015-03-27T00:00:00-07:00

There's a lot of partisan misinformation on the Internet. This isn't a new problem. Orwell wrote in 1945:

Much of the propagandist writing of our time amounts to plain forgery. Material facts are suppressed, dates altered, quotations removed from their context and doctored so as to change their meaning. Events which it is felt ought not to have happened are left unmentioned and ultimately denied.

When I'm following an argument and trying to figure out who's right, I usually try to do some "triangulation" to check the reliability of the sources that are being cited. To check what author A says about X -- assuming that X isn't a subject I know much about -- I find a number of techniques to be useful:

Find something I do know about, and see what A has to say about it. Same principle as checking the reliability of a telephone book by looking up your own listing.
Find out what other people have to say about X.
Find out what other people have to say about A's discussion of X -- book reviews, for example.

The Internet and Google make it pretty easy to do this even for an author you've never heard of. Of course, once you find someone commenting on A, you then need to check their reliability, and so on. I look for longer articles or essays (or even books), where the writer has the time and space to present their reasoning at length.

Wikipedia is better than nothing--it's very convenient, and probably not bad for basic facts, through the work of editors who keep an eye out for vandalism --but Encyclopaedia Britannica is more authoritative and coherent, and not very expensive (it's currently available as an iOS app for $15/year).

I find the New York Review of Books archive particularly useful, especially on history and politics. An online subscription (currently $69/year) includes access to the full archive of more than 15,000 articles, dating back to 1963. The name is a bit misleading: it's not like the book review section in a newspaper, like the Globe and Mail's, where the reviewers are journalists who laud noteworthy books. The NYRB's reviewers and essayists are brilliant writers who are often experts in the field. And they don't hesitate to express harsh judgments and get into heated arguments. (My favorite barb is from Hans Morgenthau's 1964 review of View from the Seventh Floor, by W. W. Rostow, chair of the US State Department's Policy Planning Council: "Mr. Rostow has a powerful, brilliant, and creative mind. How could such a mind produce such trash?")

For academic topics, I check sites like Google Scholar and JSTOR (which now provides limited free access for individuals). These days, many academics also have blogs or websites where they publish a lot of their writings. Two good examples are Paul Krugman (economics) and Joseph Heath (political philosophy), who write both for other academics and for a popular audience.

Reason and explanation

2015-03-05T00:00:00-08:00

In Enlightenment 2.0 (2014), Joseph Heath describes how conservatives in the US are hostile to experts, and prefer feelings (also known as "common sense") over reason. (If this makes you doubt Heath's even-handedness, he and Andrew Potter also wrote a book criticizing the Left's idea that political change will come through creating a counterculture, Rebel Sell.)

... conservatives have become enamored of the idea that politics is ultimately not about plans and policies, it's about "gut feelings" and "values." Elections are decided by appealing to people's hearts, not their heads. So, for example, when a Republican candidate says that he is going to "close down the Department of Energy," he doesn't really mean that he is going to close down the Department of Energy and fire all of its employees. After all, the U.S. Department of Energy is responsible for maintaining the nuclear reactors in U.S. military submarines, among other things. What it really means to say that you'll close down the Department of Energy is just "I feel very strongly that the federal government hates oil companies, and I want to change that." The objective is to communicate your feelings, not your thoughts.

This privileging of visceral, intuitive, gut feelings is central to the movement known as "common sense" conservativism, which has become a powerful force everywhere in the Western world, not just the United States. The central characteristic of common sense, according to Republican communication strategist Frank Luntz, is that it "doesn't require any fancy theories; it is self-evidently correct." To say that it is self-evident is to say that is known to be correct without argument and without explanation.

There's at least two immediate problems with this approach. One is that if your beliefs are wrong, your feelings won't tell you this. Your beliefs, incorrect though they may be, will still feel correct to you.

A second problem is that our society depends on many complex institutions whose workings aren't at all self-evident: science and technology, the law, bureaucracies, corporations, banks, and so on. Naturally, the "common-sense" approach, impatient with anything complicated, is hostile to these institutions; and given free rein, may attempt to dismantle them.

So unless you're willing to use reason to examine your beliefs, you won't be able to correct them, and you may end up disconnected from reality. And you may end up destroying institutions simply because you don't understand them.

What do we mean by reason? Heath describes it as a mental faculty that takes time and effort: you need to sit down and put things in order, and express them using language, one step at a time.

The term reason traditionally refers to a particular mental faculty, one that is associated with a distinctive style of thinking. David Hume famously described reason as a "calm passion," and a degree of detachment and distance from immediate circumstances is a hallmark of the rational style. But perhaps the more significant feature of rational thought is that it can be made fully explicit. To the extent that we are reasoning, we are fully aware of what we are doing and we are able to explain fully what we have done--hence the connection between the faculty of reason and the practice of giving reasons, or argumentation and justification. For any particular claim, we must be able to explain what entitles us to make it and we must be willing to acknowledge what it commits us to.

This provides the basis for the traditional contrast between reason and intuition. An intuitive judgment is one that you make without being able to explain why you made it. Rational judgments, on the other hand, can always be explained.

Tom Stafford suggests that an excellent way to test one of your beliefs is to try to explain it, step by step:

A little over a decade ago Leonid Rozenblit and Frank Keil from Yale University suggested that in many instances people believe they understand how something works when in fact their understanding is superficial at best. They called this phenomenon "the illusion of explanatory depth". They began by asking their study participants to rate how well they understood how things like flushing toilets, car speedometers and sewing machines worked, before asking them to explain what they understood and then answer questions on it. The effect they revealed was that, on average, people in the experiment rated their understanding as much worse after it had been put to the test.

What happens, argued the researchers, is that we mistake our familiarity with these things for the belief that we have a detailed understanding of how they work. ...

It's a phenomenon that will be familiar to anyone who has ever had to teach something. Usually, it only takes the first moments when you start to rehearse what you'll say to explain a topic, or worse, the first student question, for you to realise that you don't truly understand it. All over the world, teachers say to each other "I didn't really understand this until I had to teach it". Or as researcher and inventor Mark Changizi quipped: "I find that no matter how badly I teach I still learn something".

... Research published last year on this illusion of understanding shows how the effect might be used to convince others they are wrong. The research team, led by Philip Fernbach, of the University of Colorado, reasoned that the phenomenon might hold as much for political understanding as for things like how toilets work. Perhaps, they figured, people who have strong political opinions would be more open to other viewpoints, if asked to explain exactly how they thought the policy they were advocating would bring about the effects they claimed it would.

Recruiting a sample of Americans via the internet, they polled participants on a set of contentious US policy issues, such as imposing sanctions on Iran, healthcare and approaches to carbon emissions. One group was asked to give their opinion and then provide reasons for why they held that view. ...

Those in the second group did something subtly different. Rather that provide reasons, they were asked to explain how the policy they were advocating would work [emphasis added]. They were asked to trace, step by step, from start to finish, the causal path from the policy to the effects it was supposed to have.

People in the second group--those who tried to explain how the policy would work--realized that their understanding of the issues wasn't as strong as they thought it was, and their views became less certain. In other words, they were successful in realizing that their beliefs might be incorrect. If you want to be able to correct things you believe which aren't true, you need to keep in mind that your beliefs may be false, but this is surprisingly difficult; the natural tendency is to look for evidence reinforcing your existing beliefs ("confirmation bias"). Sometimes called "Cromwell's rule," after Oliver Cromwell: "I beseech you, in the bowels of Christ, think it possible that you may be mistaken."

About me

2015-02-27T00:00:00-08:00

I'm a software developer based in Vancouver, Canada. I'm married, with two children.

I'm interested in politics and history, especially 20th-century history, diplomacy and war, good government, and Canadian politics. How did we get into the nuclear arms race? What were the causes of the 2008 financial crisis and subsequent recession, and is Canada in danger of having the same thing happen? What effects will the Internet have on politics, in the short term and the long term?

I'm not an expert in any of these subjects, I'm just an interested citizen who reads a lot. I think that we tend to take what we have in Canada for granted-- wealth, political stability, a tradition of good government, security against external threats, successful multiculturalism--without thinking too much about where they came from, how they've developed over time, and how we would cope if they were to break down.

I've always voted. As a voter, the key question for me is: Has the government been doing a good job, or not? And how can you tell? One of my goals for this blog is to try to spend some time thinking and writing about this question.

I like to argue with people over the Internet. Arguing doesn't often change people's minds, but it does help to clarify your own beliefs. In Pragmatism: A New Name for Some Old Ways of Thinking (1907), William James describes the difficulty of changing your mind, and what happens when you're presented with new information:

The observable process which Schiller and Dewey particularly singled out for generalization is the familiar one by which any individual settles into new opinions. The process here is always the same. The individual has a stock of old opinions already, but he meets a new experience that puts them to a strain. Somebody contradicts them; or in a reflective moment he discovers that they contradict each other; or he hears of facts with which they are incompatible; or desires arise in him which they cease to satisfy. The result is an inward trouble to which his mind till then had been a stranger, and from which he seeks to escape by modifying his previous mass of opinions. He saves as much of it as he can, for in this matter of belief we are all extreme conservatives. So he tries to change first this opinion, and then that (for they resist change very variously), until at last some new idea comes up which he can graft upon the ancient stock with a minimum of disturbance of the latter, some idea that mediates between the stock and the new experience and runs them into one another most felicitously and expediently.

... Loyalty to [existing beliefs] is the first principle--in most cases it is the only principle; for by far the most usual way of handling phenomena so novel that they would make for a serious rearrangement of our preconceptions is to ignore them altogether, or to abuse those who bear witness for them.

Knowing this, my goals are modest: not to change the mind of the person I'm arguing with, but to hopefully convince other readers who haven't yet made up their minds.

To avoid flamewars, I try to stick to the unofficial Fidonet motto: "don't offend, and don't be too easily offended."

I'm wary of simple ideas, especially when it comes to topics like politics, diplomacy, and war. Usually I find that when you dig into the specifics of a subject, the picture quickly becomes complicated. I also like to find out what the experts think; after all, they've spent far more time than I have studying the subject.

Programmers have a saying: RTFM. It's an admonition against our tendency to learn the bare minimum that we need in order to get by--more bluntly, our laziness. I figure that if I'm going to have strong opinions on something, I should put in the time and energy to learn about the full complexity of the subject, and to read what the experts have to say. I then need to be able to summarize what I've learned, in a way that'll hopefully be convincing to other people.