This past summer, Steven Chu, the Nobel Prize-winning physicist who currently heads Lawrence Berkeley National Laboratory--and who has been tapped to be the next Secretary of Energy--delivered a talk on climate change and how to combat it. Consider, Chu said, the refrigerator.
Refrigerators consume a lot of energy; all alone, they account for almost fifteen per cent of the average home's electricity use. In the mid nineteen-seventies, California--the state Chu now lives in--set about establishing the country's first refrigerator-efficiency standards. Refrigerator manufacturers, of course, fought them. The standards couldn't be met, they said, at anything like a price consumers could afford. California imposed the standards anyway, and then what happened, as Chu observed, is that "the manufacturers had to assign the job to the engineers, instead of to the lobbyists." The following decade, standards were imposed for refrigerators nationwide. Since then, the size of the average American refrigerator has increased by more than ten per cent, while the price, in inflation-adjusted dollars, has been cut in half. Meanwhile, energy use has dropped by two-thirds.
The transition to more efficient fridges, Chu pointed out, has saved the equivalent of all the energy generated in the United States by wind turbines and solar cells. "I cannot impress upon you how important energy efficiency is," he said.
This is a classic example of how government can use regulation to empower citizens to collective solve problems that they could never tackle on their own. It's also a powerful example of how the scientific claims of industry are often wholly unsubstantiated. They said that the new standards couldn't be met at a price consumers could afford, but once they were imposed, the size of refrigerators grew, their efficiency skyrocketed, and their price fell by half.
Policies that protect the environment and save energy are not either/or propositions. We can save money and energy at the same time. Never ever underestimate the power of the market to innovate if the incentives are correctly aligned.
And while we're on the subject... Obama's weekly radio/YouTube address hits on that very subject today:
Whether it's the science to slow global warming; the technology to protect our troops and confront bioterror and weapons of mass destruction; the research to find life-saving cures; or the innovations to remake our industries and create twenty-first century jobs - today, more than ever before, science holds the key to our survival as a planet and our security and prosperity as a nation. It's time we once again put science at the top of our agenda and worked to restore America's place as the world leader in science and technology.
I'm a geek at heart - always have been, always will be. It makes me happy beyond words to have a fellow geek in the White House, one who is actually excited to surround himself with physicists, geneticists, biochemists, marine biologists, and ecologists.
Facts aren't just stubborn things, they are also nonpartisan things. Reality is what it is. For the first time in my lifetime, we will have a President of the United States who actually understands that.
Here's the text of Obama's address for those who can't watch the video:
Whether it's the science to slow global warming; the technology to protect our troops and confront bioterror and weapons of mass destruction; the research to find life-saving cures; or the innovations to remake our industries and create twenty-first century jobs--today, more than ever before, science holds the key to our survival as a planet and our security and prosperity as a nation. It is time we once again put science at the top of our agenda and worked to restore America's place as the world leader in science and technology.
Right now, in labs, classrooms and companies across America, our leading minds are hard at work chasing the next big idea, on the cusp of breakthroughs that could revolutionize our lives. But history tells us that they cannot do it alone. From landing on the moon, to sequencing the human genome, to inventing the Internet, America has been the first to cross that new frontier because we had leaders who paved the way: leaders like President Kennedy, who inspired us to push the boundaries of the known world and achieve the impossible; leaders who not only invested in our scientists, but who respected the integrity of the scientific process.
Because the truth is that promoting science isn't just about providing resources--it's about protecting free and open inquiry. It's about ensuring that facts and evidence are never twisted or obscured by politics or ideology. It's about listening to what our scientists have to say, even when it's inconvenient--especially when it's inconvenient. Because the highest purpose of science is the search for knowledge, truth and a greater understanding of the world around us. That will be my goal as President of the United States--and I could not have a better team to guide me in this work.
Dr. John Holdren has agreed to serve as Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy. John is a professor and Director of the Program on Science, Technology, and Public Policy at Harvard's Kennedy School of Government, as well as President and Director of the Woods Hole Research Center. A physicist renowned for his work on climate and energy, he's received numerous honors and awards for his contributions and has been one of the most passionate and persistent voices of our time about the growing threat of climate change. I look forward to his wise counsel in the years ahead.
John will also serve as a Co-Chair of the President's Council of Advisors on Science and Technology--or PCAST--as will Dr. Harold Varmus and Dr. Eric Lander. Together, they will work to remake PCAST into a vigorous external advisory council that will shape my thinking on the scientific aspects of my policy priorities.
Dr. Varmus is no stranger to this work. He is not just a path-breaking scientist, having won a Nobel Prize for his research on the causes of cancer--he also served as Director of the National Institutes of Health during the Clinton Administration. I am grateful he has answered the call to serve once again.
Dr. Eric Lander is the Founding Director of the Broad Institute at MIT and Harvard and was one of the driving forces behind mapping the human genome--one of the greatest scientific achievements in history. I know he will be a powerful voice in my Administration as we seek to find the causes and cures of our most devastating diseases.
Finally, Dr. Jane Lubchenco has accepted my nomination as the Administrator of NOAA, the National Oceanic and Atmospheric Administration, which is devoted to conserving our marine and coastal resources and monitoring our weather. An internationally known environmental scientist and ecologist and former President of the American Association for the Advancement of Science, Jane has advised the President and Congress on scientific matters, and I am confident she will provide passionate and dedicated leadership at NOAA.
Working with these leaders, we will seek to draw on the power of science to both meet our challenges across the globe and revitalize our economy here at home. And I'll be speaking more after the New Year about how my Administration will engage leaders in the technology community and harness technology and innovation to create jobs, enhance America's competitiveness and advance our national priorities.
I am confident that if we recommit ourselves to discovery; if we support science education to create the next generation of scientists and engineers right here in America; if we have the vision to believe and invest in things unseen, then we can lead the world into a new future of peace and prosperity.
Our global financial system has become so staggeringly complex and opaque that we've moved from a world of risk to a world of uncertainty. In a world of risk, we can judge dangers and opportunities by using the best evidence at hand to estimate the probability of a particular outcome. But in a world of uncertainty, we can't estimate probabilities, because we don't have any clear basis for making such a judgment. In fact, we might not even know what the possible outcomes are. Surprises keep coming out of the blue, because we're fundamentally ignorant of our own ignorance. We're surrounded by unknown unknowns.
To which Art Hutchinson replies:
It's tempting to think that all things are predictable given enough information, enough minds, enough time and enough computing power. It's just not true. (Which is not to say that some things are not predictable... and with incredible precision... a phenomenon that leads to overestimating the scope of problems and questions that lend themselves to such methods.)
...I liken Mr. Homer-Dixon's observations to those tragically massive car pile-ups that happen a few times of year in fog-prone areas like the Central Valley of California. Everyone is driving along at a reasonable speed, with reasonable spacing between vehicles. People are sipping coffee, tuning radios, maybe talking on cell phones. Slightly distracted, but mostly responsible. All is normal.
Then the first guy hits a fog bank and can't see squat. He taps his brakes. The second guy sees red lights and fog coming up fast and taps his brakes just a little bit harder, and so on. In just a few seconds, hundreds of cars end up in a tangled heap and people die. All because the guy in front was convinced by every one of his senses and not without justification based on experience that the visibility on the next 100 yards of road would be the same as on the last 100 yards of road.
This presents an enormous policy dilemma. On the one hand, as we are seeing in our newspapers every day, markets cannot function efficiently without information. Information asymmetries and imbalances are an important class of market failure that can often only be rectified by government regulation. And yet... without accurate information on the markets that are to be regulated, regulators cannot craft intelligent and efficient regulation. Incremental reform is usually the best approach in this sort of situation, but when you are in the midst of a crisis, incremental reform is often not an option.
If I were teaching Intro to Policy on my own this semester...
I haven't had any time to blog these past two days, but if I had, these would have been the stories I blogged about.
+ California kids should pay very close attention to this story. Never, ever underestimate the power of El Piolín.
+ The Kennedy endorsement was what made the El Piolin story possible. But its not the only impact of the endorsement.
+ Everyone is focused today on the fact that the US economy shed 17,000 jobs last month. That's big, but not nearly as big as this: Last year, the US economy fell nearly 1/2 million new jobs short of keeping up with the number needed to keep up with overall population growth.
+ Exxon, meanwhile, had a great year. A $40+ billion - that's with a b - profit for them. After taxes.
+ Credit where credit is due: David Broder called McCain's resurgence many many moons ago. Like so many others, I mocked him for this. He was right, I was wrong.
+ Meanwhile, Afghanistan - the home of the people who attacked us on 9/11 - is gradually descending into chaos. McCain rails endlessly about "waving the white flag of surrender in Iraq," but he's silent about this. Remind me again why he is supposedly "right" about national security issues? [Ah - SecDef Gates explains. More violence means we're winning! I shit you not.]
+ Andrew Sullivan thinks (thought?) Ghandi's pacifism was "idiotic." Clearly he doesn't understand that for Ghandi, pacifism non-violent resistance was both a means and an end. [More here.]
+ At this point, Republicans are probably getting used to hearing bad news about their party. But that said, this is very, very bad news.
+ Looking for evidence that would suggest the Clinton campaign is freaked out about Obama's surging popularity? Exhibit A: A spokesperson on a conference call arranged by the Clinton camp just said Obama's tactics on health care reform are as offensive as a Nazi march in Illinois.
Am I the only one who thinks this is a really dumb idea?
"We should even have a government blogging team where people in the agencies are constantly telling all of you, the taxpayers, the citizens of America, everything that's going on so that you have up-to-the-minute information about what your government is doing, so that you too can be informed, and hold the government accountable," Clinton said.
I wonder who precisely she think would want to read this thing? I'm a stone cold political junkie, and I can't imagine myself ever reading something like this. Just because we can blog doesn't mean we should. I'm all for the idea of increasing transparency and accountability in government, but please... no government blogging teams, OK?
We still have a costly welfare bureaucracy that caters more to minorities than to whites, but it’s no longer a political liability for liberals because the system is no longer the disaster that it became in the Seventies and Eighties
Although it is true that minorities are over-represented among the poor when calculated as a percentage, in sheer numbers a vast majority of the individuals who collect "welfare" are white.
According to the Census Dept, there were almost 36.5 million Americans living in poverty in 2006. Of that group, 16 million were white, 9 million black, and 9.2 million Hispanic.
Welfare doesn't "cater" to minority groups. If it "caters" to anyone it is to the poor.
And that, of course, assumes that you define "welfare" solely as means-tested programs designed to alleviate poverty. If you do not - a much more appropriate definition is any government program designed to transfer wealth from one group to another - you will be forced to include things like the mortgage interest tax deduction, a welfare program aimed at the middle class that explicitly transfers wealth from those who rent homes to those who own them. Or, as another example, the tax exemption provided to individuals for any contributions made by their employer to cover the cost of their health insurance, an exemption that transfers wealth from those who do not have health insurance to those who do.
Does Roth believe the myth or is he deliberately lying? Given that he's a smart guy, I'd assume the former over the later. And given that this claim comes in an apparent defense of Republican rhetoric on race and welfare, that may actually be worse.
More nonsense from CATO, this time thanks to the NYT. From the very same article linked to at the end of my last post on our disappearing middle class, the NYT offers this defense of growing income inequality from CATO:
Chris Edwards, director of tax policy for the Cato Institute, the nation’s leading promoter of libertarian thought, said that even the income gains among the top 1 percent might be illusory because this group gets most of the income from business. He pointed to a report this week in Tax Notes magazine, by Peter Merrill of PricewaterhouseCoopers, that said partnerships and limited liability companies reported 51.5 percent of all business income in 2004, up from 47.3 percent in 2000.
Mr. Edwards said that income from such businesses shows up on the tax returns of individuals, not their companies, and so the rise in reported income at the top may represent a change in how income is reported.
The gains among the top 1% might be "illusory" because they come from business. What the hell is this supposed to mean? If a partnership or an LLC is making more money, it is making more money for its owners. That's why they are required to include it in their income taxes. It's income. The source is irrelevant when you are considering which group is gaining the most.
Rich, successful business owners are making more money than ever. They are doing so in part because the rest of us are making less money than we used to. These facts are opposite sides of the same coin. CATO's defense isn't a defense at all. It's merely a restatement of the problem. But reading today's NYT you'd never know that. Reading today's NYT you'd think it was actually a defense.
This is neither hard to explain nor to understand. Is it really asking to much to expect the NYT to understand the things it reports on?
FP Passport has an interesting update on the sub-prime mortgage mess. Two parts worth passing along:
There is a widely held belief in the United States that the fallout from the subprime mortgage meltdown primarily affects lower-income borrowers who are primarily Hispanic or African American. While the subprime crash has affected the middle and upper class by slowing economic growth, few believed they would lose their homes.
Turns out, this perception is completely false.
As the post goes on to explain, subprime loans helped fuel the McMansion phenomenon across the nation's suburbs, so its actually much more of a middle class phenomenon than most people think. And that, as FP points out, is why it should almost inevitably lead to a fairly severe recession. It's one thing when poor people lose their homes; its another thing entirely when it starts happening to upper middle class people.
Which leads to the second point:
But the Dow keeps chugging along. I can't figure out why. I asked a trader in Chicago what he made of it, and his explanation was simple—it's irrational. Stocks are trading up on the hope that Fed Chairman Ben Bernanke will cuts rates again, as he did last month. But there's no indication that would happen. It would probably be a mistake, as it could (and probably would) trigger inflation.
I realize that it is probably naive of me to hope that this will one day become common knowledge, but I'm going to hope nonetheless. The performance of the stock market has nothing to do with the overall health of the economy. Nothing. The stock market really is just legalized gambling writ large. Its about large institutional investors betting on things like the next move made by the Federal Reserve.
Most Americans own homes or condos. Even greater numbers of us live in them. Most of us do not, however, own stocks or bonds. The things that Wall St. buys and sells belong to the upper class, not "middle America."
NEW YORK (Reuters) - The richest one percent of Americans earned a postwar record of 21.2 percent of all income in 2005, up from 19 percent a year earlier, reflecting a widening income disparity among different classes in the nation, the Wall Street Journal reported, citing new Internal Revenue Service data.
The data showed that the fortunes of the bottom 50 percent of Americans are worsening, with that group earning 12.8 percent of all income in 2005, down from 13.4 percent the year before, the paper said.
It said that while the IRS data goes back only to 1986, academic research suggests that the last time wealthy Americans had such a high percentage of the national income pie was in the 1920s.
The article cited an interview with President Bush, who attributed income inequality to "skills gaps" among various classes. It said the IRS didn't identify the source of rising income for the affluent, but said a boom on Wall Street has likely played a part.
So the "skills gap" explanation is coming back, eh? OK, I'll bite. If you believe in this explanation of things, please explain to me what precisely has happened over the past 10 years that has allowed the skills of those at the top to improve so rapidly. A 2.2% increase in the total share of national income taken by the top 1% is an enormous jump for one year. Were they all going to school during that time? and if so, how did they have time to work so hard? Do those at the top really have that much more talent than all of the rest of us?
And before you answer those questions, consider this:
New data shows that after adjusting for inflation, 95 percent of Americans reported smaller incomes to the tax man in 2005 than in 2000.
Despite this, all Americans had more in their pockets as a result of the Bush tax cuts, although the increases ranged from barely perceptible for the bottom half of American earners to thousands of dollars a month for those at the top, Internal Revenue Service figures show.
For the bottom half of Americans, the average after-tax income in 2005 was $14,526, which was $20 a month more than in 2000. Without the tax cuts, their incomes would have slipped by $234 a year, or around $20 a month.
The next higher 25 percent, who made $30,881 to $62,068, had on average $52 a month more after taxes in 2005. For the next 20 percent above that, the increase ranged from $144 to $274 a month.
The only group to report higher incomes both before and after taxes was the top 5 percent.
After-tax income for the 96th through 99th rungs on the income ladder rose $5,656 on average, or $471 a month. For the top 1 percent, whose incomes averaged more than $1.2 million, after-tax income rose by $64,796, or $5,400 a month, even though their average income rose only $18,000 in the same period. More than 75 percent of taxpayers make less than $5,400 a month.
Analysis of the new income tax data, known as Table 5, also shows that while incomes rose markedly in 2005 from 2004, with all taxpayers’ average income up nearly 4 percent in real terms, average pretax income declined slightly for 75 percent of Americans.
Among the top quarter of American earners — those whose average incomes did rise in 2005 compared with the year before — more than half of the gains went to the top 1 percent.
The figures on incomes, both before and after taxes, help explain why so many Americans report feeling economic distress, despite overall economic growth since the Internet bubble burst on Wall Street in 2000 and the 9/11 attacks the next year. Other official data shows that median household income in 2006 rose by a fraction of 1 percent over 2005 only because more people were working and they were working longer hours.
Most Americans are working harder but earning less. Except for those uber-talented people up at the top. Not only are they earning more, they are being taxed less, too!
Trickle Down economics is one hell of a way to run a country, no?
