Friday, April 30, 2010

April Cycling

Even with all the rain this April I managed to accumulate 535 miles on my bike for the month, nearly doubling the March total.

Emissions Trading Workshop

I'm heading up to Purdue's Climate Change Research Center today for an Emissions Trading Workshop. Fortunately, I'm not a speaker, but an invited guest. The speakers list is very impressive, including people like Denny Ellermen (MIT), Michael Walsh (Chicago Climate Exchange), and Karen Palmer (Resources for the Future). I may do some live blogging, if someone says something of special interest.

Happy Birthday Simon Kuznets (1901-1985) and Theodore Schultz (1902-1998)

Two Nobel laureates in Economics, born on the same day a year apart.Kuznets was most famous for his contributions to the theory of economic growth, including work on gross national product and the business cycle (the "Kuznets Swing") and his work on economic inequality (the "Kuznets Curve," which has since been adapted to explain differences in national environmental performance as the "Environmental Kuznets Curve").

Schultz received the award for his work in developmental economics, especially the economics of agriculture. He made major contributions to the theory of human capital development.


Simon Kuznets

















Theodore Schultz

Thursday, April 29, 2010

A Windy Ride

The winds were up in Central Indiana this evening for the Nebo Ridge training ride. Blowing from the south at 20 mph, with gusts up to 30 mph, the "Killer Bs" rode north from the bike shop barely having to turn a pedal. After we crossed Hwy 32, the fireworks started as usual. Once the pace went over 30, I jumped off the bus, knowing that I needed to conserve energy for the coming crosswinds and headwinds.

Still on the way north, at a more moderate speed of 25-27 mph, I picked up a few other stragglers (all really good, strong riders), and we stayed together, knowing that we would soon be heading into the wind, and we could use strength in numbers. Indeed, once we turned West, the crosswind was truly brutal (vindicating my decision to to change out my deep-dish wheels for a set with shallow rims before the ride). On the short (1 or 2-mile) ride West, and the 8-mile ride South, we picked up several more riders, so that we finished with a pretty respectable gruppo. The last rider we picked up was my buddy Karl, who helped a lot to pull the group home. I spent a respectable amount of time on the front myself.

Well, that's 127 miles since Monday. So, I'm off the bike tomorrow. Good thing too: winds are supposed to be even stronger. Unfortunately, the coming weekend looks like a washout (almost literally).

If Countries Could Move: The Economist Redraws the Map of Europe























The map is explained in a very entertaining story here.

Happy 22d Birthday Jonathan Toews

The very talented captain of the Chicago Blackhawks.

Wednesday, April 28, 2010

The Critical Habitat of Endangered Languages

New York City. This sentence comes from an article (here) in today's New York Times:
In addition to dozens of Native American languages, vulnerable foreign languages that researchers say are spoken in New York include Aramaic, Chaldic and Mandaic from the Semitic family; Bukhari (a Bukharian Jewish language, which has more speakers in Queens than in Uzbekistan or Tajikistan), Chamorro (from the Mariana Islands), Irish Gaelic, Kashubian (from Poland), indigenous Mexican languages, Pennsylvania Dutch, Rhaeto-Romanic (spoken in Switzerland) and Romany (from the Balkans) and Yiddish.
The article also mentions Vlashki (Istro-Romanian), Garifuna (remnant of language spoken by descendants of African slaves), Mamuju (Astronesian), Ormuri (language spoken in regions of Pakistan and Afghanistan),  Massalit (a tribal language from Darfur), and Garifuna (from Central America).

Salazar v. Buono

70 years ago, the Veterans of Foreign Wars (VFW) erected a cross on Sunrise Rock, which in 2004 became a federal, that is, publicly-owned, parkland. In 1999, the National Park Service (NPS) denied a permit request to install a Buddhist shrine at the same location, announcing that it planned to remove the cross. But, before that could happen, Congress enacted a law prohibiting the expenditure of public funds for cross removal. That led to the first lawsuit in this saga.

In 2001, a former NPS employee, Frank Buono, sued the NPS claiming that the existence of the cross on public lands violated the Establishment Clause of the First Amendment to the US Constitution. The federal district court ruled in his favor, and awarded an injunction. While an appeal was pending, Congress authorized a transfer of the one acre of land on which the cross was standing to the VFW in exchange for an acre of land of equal value. After the 9th Circuit US Court of Appeals affirmed the district court ruling, the NPS proceeded with the land exchange. Mr. Buono sued again, claiming that the land transfer was not sufficient to avoid invalidation under the Establishment Clause because the sole purpose of the land exchange was to preserve the cross, a religious symbol if ever there was one.

Today, the Supreme Court issued a ruling (here) in the case upholding the land transfer. Justice Kennedy wrote the lead opinion in a plurality decision (that is, an opinion that reflected the views of 4 justices). Justice Alito concurred; Justice Scalia wrote a separate concurrence joined by Justice Thomas (mainly because they would have denied the plaintiff standing to sue in the first place). Justice Stevens's dissent was joined by Justices Ginsburg and Sotomayor, but Justice Breyer dissented separately. Obviously, the Justices have lots of different views on this case, and constitutional law scholars will no doubt be parsing their language over the next several months. I will withhold my own judgment until I've had a chance to read all the opinions for myself.

Climate Bill Before Immigration Reform

The Washington Post reported yesterday (here) that the Senate will take up climate change legislation before it takes up immigration reform. For reasons I specified the other day (here), this is very good news.

It will be interesting to see the response of Republican Senator Lindsey Graham. Late last week, Graham  withdrew his support for the climate proposal he co-authored with Senators Kerry and Lieberman after Harry Reid and other Democratic senators signaled that that immigration reform might jump to the front of the agenda in the wake of Arizona's new, controversial, and quite possibly unconstitutional immigration enforcement law. If Reid brings Graham's climate bill up first, it will be a test of whether Graham's withdrawal of support was principled or merely a cave-in to pressure from his own party not to play nice with the Democrats.

Hat tip: Dan Farber at Legal Planet.

Greg P. Macey on "Coasean Blind Spots"

Greg Macey, a Visiting Assistant Professor of Law at Fordham, has a very interesting new article in the Georgetown Law Journal (here) in which he broadens the concept of "transaction costs" to include intra-firm (or intra-organization) negotiations on policy and regulatory-compliance. It is very interesting and, most importantly, he gets Coase right!

Here is the abstract:
This Article outlines what I refer to as the "incomplete institutionalism" of law and economics, a condition that weakens the field's predictions for bargaining and what it has to say about regulatory choice. I chart this condition, borne out of our failure to finish the work that Coase began on institutions, in the area of environmental law. Scholars concerned with the pollution problem make ample use of of Calabresi and Melamed's Cathedral framework, one of the most powerful lenses in legal scholarship. Yet as it is applied in the form of arguments over transaction costs, there are cracks in the glass that blur how we choose among competing regulations. A more complete account of institutions, building on advancements in organization theory, reveals as a second set of transaction costs that arise as firms make decisions and carry out regulatory initiatives. These costs rival the holdout, free rider, and bilateral monopoly costs that are of primary interest to property theorists. If properly addressed, they can lead to dramatic improvements in environmental protection.

Happy Birthday Kurt Godel (1906-1978)

The great Austrian-American mathematician and logician.

Monday, April 26, 2010

Anyone Up for a Cycling Tour of Yellowstone?

BikeRadar.com is reporting (here) that a 40km stretch of road from the southern entrance of the park to West Thumb (pictured at right) will be closed to all traffic except bicycles until May 14th. Another, shorter segment will be open only for bikes until May 7th.

Unfortunately, it's a pretty long way to get there from Indy for what amounts to a one-day tour. But cycling on closed roads in Yellowstone must be pretty fabulous.

Most Interesting Sentence I've Read Today

From this article at National Geographic Daily News
[I]t takes about 270 gallons (1,022 liters) of water to produce a dollar’s worth of sugar, about 200 gallons (757 liters) to make a dollar’s worth of pet food, and 140 gallons (530 liters) to make a dollar’s worth of milk.

Are Law Reviews Obsolete?

I just finished leafing through the latest Current Index of Legal Periodicals (CILP) which I receive electronically once or twice a week. It reports all new articles published in law reviews and journals, broken down by subject matter. Personally, I've always skipped the subject-matter headings and gone straight to the full listings of tables of contents at the end of each CILP.

Over time, I have noticed that the CILP has become mostly irrelevant to me, as I decreasingly find new articles worth scanning, let alone printing for a full read. This is not to suggest a decline in the quality of new law review articles. Rather, I find almost everything I need or want to read on the Social Science Research Network (SSRN) months (at least) before those papers are published in law journals. The only significance for me of final publication is the correct citation for the article, and even that is not strictly necessary because citations to SSRN working papers seem perfectly acceptable to most publishers.

What, then, is the value-added of final publication in law journals? For one, there is always the risk that a paper will change substantially between its initial publication on SSRN and its final publication in some law journal. Many authors will solicit or simply receive comments on the working papers they post on SSRN, and amend their papers accordingly. However, that risk is mitigated to some extent by the possibility of uploading  updated versions of papers to SSRN, which is something I have done regularly.

Another consideration is the very substantial editing process that articles go through once they are accepted for publication in law journals. I'm inclined to discount the importance of that editing process because, in my experience, for any given paper there is at best a 50-50 chance that law-student editing actually improves it.

Far more importantly, final publication in a law journal is vital to junior faculty members in the promotion and tenure (P&T) process because self-publication on SSRN does not count as publication for P&T purposes. Apparently, acceptance of a paper by a group of second-year student law review editors provides a crucial proxy for law faculties, which will not as a rule accept an SSRN publication, even if accompanied by gushing letters of praise from a gaggle of Nobel laureates.

Along the same lines, final publication in a law journal provides a market signal to the legal academy of the quality of the article, based simply on where it is published. An article published in the Harvard Law Review is almost irrebutably presumed to be "better" than one published in some "lesser" journal. In reality, this is nonsense. I say that, of course, as someone who has never published in the Harvard Law Review. 

None of the reasons presented above for final publication of articles in law journals is particularly important to me or my own work, and should not be relevant for most experienced researchers. When conducting research, I'm happy to rely for the most part on my own sense of the quality (or lack thereof) of papers I read on SSRN. When reviewing papers outside my own limited areas of expertise, I usually will ask others whom I trust for their opinions. For me, those trusted friends and colleagues are far more valuable and trustworthy proxies than all student law review editors combined.

I don't suppose we'll ever do away with law journals or other forms of final publication mainly because of the practical purposes they serve in the P&T process. For many researchers like me, however, final law review publication remains important only as a source of page cites.

Andy Klein on the Coming Genomics Revolution in Toxic Tort Law

My revered colleague Andy Klein has posted his first-ever blog over at TortsProf Blog. His post is on how developments in the science of genomics are increasingly helping researchers to resolve causation-proof problems that have long bedeviled the legal system by establishing causal links between exposures to toxic substances and harms that manifest years, even decades, later. Interesting stuff.

Happy Birthday Eugene Delacroix (1798-1863)


















Self-portrait (1837).

Sunday, April 25, 2010

Senator Graham, Democratic Priorities, and the Senate Climate Bill

Republican Senator Lindsey Graham, who has worked for months crafting a weak, but not useless, climate bill with Democratic Senator John Kerry and Independent Senator Joe Lieberman, has reportedly (see here) pulled his support for the legislation because the Democrats have allegedly elevated immigration reform above climate change on the political agenda. One might question the sincerity of Graham's stated motivation; he has been under political pressure for months for failing to toe the party line of complete and utter obstructionism to the Obama Administration's stated policy goals. Even if he has ulterior motives, I share Graham's concern about the Democratic Party's waning commitment to enact climate legislation.

The Obama Administration wanted climate legislation enacted before 2010 for two main reasons: (1) to improve prospects for a successful Copenhagen summit; and (2), more importantly, to avoid the prospect that climate policy might become a useful issue for Republicans in the 2010 midterm elections. Given those coming elections and scant prospects for a new international treaty this year, the impetus to enact climate legislation has declined. Meanwhile, thanks to the State of Arizona's enactment of a new, draconian immigration enforcement policy earlier this week (see here), the Democrats have seized on immigration reform as an issue that might boost their prospects in the coming elections. I can't speak to their political calculus, but Graham's abandonment of the climate bill is certainly no more political than the Democrats' demotion of climate policy on the immediate political agenda.

Regardless of the political motivations of the various players, the lack of support of climate legisation before the 2010 elections is problematic because prospects for climate legislation after those elections are likely to be much worse.

Happy 63d Birthday Johan Cruyff

Two words: Total football.

Saturday, April 24, 2010

Liege-Bastogne-Liege

The last of the Spring classics is tomorrow. Here is the route map:


I'm picking Belgian Philippe Gilbert for the victory, but I'll be rooting for Chris Horner.

Live streaming of the race should be available (see here) starting around 6:15 am or so, EDT.

UPDATE: Cyclingprof favorite Jens Voigt attacked with 100km to go (who else would do something that crazy?). He's probably just under orders to soft up the race for the Schleck brothers (his Saxo Bank teammates). Jens is brought back to the pack with about 60km to go.

UPDATE: The real fireworks started on a climb with about 20km to go. Andy Schleck attacked. Philippe Gilbert went with him. Eventually they were joined by Alberto Contador, Cadel Evans, Alejandro Valverde, and couple other select riders. It is from this group that the race winner will emerge.

FINAL UPDATE: Vinokourov and Kolobnev hold off the chasing group of Gilbert, Valverde and Evans to take first and second. Valverde takes third.

Wroclaw

The New York Times has a wonderful story (here) about my wife's hometown, Wroclaw (pronounced Vrots-waf), Poland. It is truly a wonderful cosmopolitan city, with a rich history captured in a terrific book by Norman Davies and Roger Moorhouse, Microcosm: Portrait of a Central European City. Most Americans have never heard of Poland's fourth largest city; some may be more likely to recognize its old German name of Breslau. In any case, it is well worth a visit, situated conveniently halfway between Warsaw and Prague.

Happy Birthday Willem de Kooning (1904-1997)



















Friday, April 23, 2010

Woodrow Wilson

Having finally finished reading John Milton Cooper Jr's biography of the 28th President of the United States, I have a sense of profound relief similar, I imagine, to what Senator Henry Cabot Lodge felt when Wilson finally departed the White House in 1921.

The most surprising thing I learned from this book about Wilson that I did not previously know: he actually sought a third term as President after suffering his debilitating stroke. That surely confirms Cooper's conclusion that the stroke caused Wilson to be delusional. 

Happy Birthday William Shakespeare (1564-1616)

His birth on this day is surmised from his baptism on April 25th.

Thursday, April 22, 2010

Barrett on "Climate Treaties and Backstop Technologies

The always innovative Scott Barrett has produced a new working paper (available here) that presents a mathematical game-theoretic model demonstrating the potential economic and political advantages of negotiating separate climate treaties around different technologies. Here is the abstract:
In this paper I examine the design of climate treaties when there exist two kinds of technology, a conventional abatement technology with (linearly) increasing marginal costs and a backstop technology (“air capture”) with high but constant marginal costs. I focus on situations in which countries can gain collectively by using both technologies. I show that, under some circumstances, countries will be better off negotiating treaties that are not cost-effective. When countries prefer to negotiate self-enforcing agreements that are cost-effective, the availability of the backstop technology causes cooperation in abatement to increase significantly.
Scott's model indicates that countries may be made better off by first negotiating a treaty for the use of very expensive "backstop technologies," such as air-capture filters (which remove carbon directly from the air at a cost of $100-$200/tCO2eq), that would only be cost-effective if global mean temperatures rise by more than 2 degrees Celsius. Although it is not entirely clear from the paper itself, I presume that the "backstop technology" treaty would only be triggered at some time in the future when global mean temperatures rise by a predesignated amount or to some predesignated level, as ascertained by some official body such as the IPCC. As Scott notes (on page 4), such a treaty would presumably be less costly to negotiate than a treaty requiring immediate mitigation using less-expensive technologies because "unlike emissions reduction, industrial air capture could be deployed by a single country, or by a 'coalition of the willing,'" thus reducing the transaction costs of collective action.

Most importantly, a "backstop technology" treaty could create a sufficiently credible commitment to very expensive future action to avert dangerous climate change that it could well induce countries, including in some simulated cases countries in addition to those that negotiated the first treaty, to engage in separate treaty negotiations around less-expensive emissions technologies that might minimize global mean temperature increases in order to prevent the first treaty's more expensive technological solutions from being triggered.

I always find Scott's ideas interesting and influential. In the case of this paper, I would add, very exciting. Not only is his policy proposal novel, I think it is probably doable, if climate policy makers in the US, China, and Europe are paying attention.

Happy Birthday Immanuel Kant (1724-1804)

Wednesday, April 21, 2010

Science and Politics

Mariette DiChristina has an excellent short piece in the May 2010 Scientific American Magazine (here) responding to letters from readers who argue that science should be kept completely separated from politics and policy. Here is a superb excerpt:
Science findings are not random opinions but the result of a rational, critical process. Science itself advances gradually through a preponderance of evidence toward a fuller understanding about how things work. And what we learn from that process is not just equivalent to statements made by any other political-interest group. It is evidence-based information that is subject to constant questioning and testing from within the scientific community. Thus, the science-informed point of view is a more authoritative and reliable source of guidance than uninformed opinions. We should not discount its value in informing public discourse.

La Fleche Wallone

Congrats to Cadel Evans for winning the Fleche Wallonne. Evans passed Alberto Contador on the final climb up the famous Mur de Huy  to take the victory. Contador wound up finishing third. Others finishing in the top ten included Joaquin Rodriguez (2d), Damiano Cunego (5th), Philippe Gilbert (6th), Chris Horner (7th), Andy Schleck (9th), and Ryder Hesjedal (10th).

Classes Have Ended...

... and now the work begins. One exam has been written; a second is about half-way done. Grading exams should take me a week or two. Once that's all done, I can really get down to business: two chapters to write to complete my monograph on climate policy; two chapters to write (one with a co-author) for a volume I am co-editing on the evolution of property systems in natural resources; revisions and updates for the second edition of my co-authored Natural Resources Law casebook; and revisions and updates for the second edition of my co-authored Law & Economics textbook. That's about 18-months' worth of research and writing to cram into about 8 weeks. Of course, there's no way I'll get all of it done on schedule, writing between rides. But one must prioritize in life.

Why do folks assume that summer is vacation time for professors, just because we're not in the classroom?

Happy Birthday Max Weber (1864-1920)

A seminal figure in the social sciences.

Tuesday, April 20, 2010

Tuesday Evening Training

I wasn't planning to post about this evening's training ride, but I couldn't resist a special request from Butler University's own Brian Murphy, one of my favorite astrophysicists. Coach Bob invited me out to Hendricks County for a training session that included his teammates from Team CFW as well as various other local racers (including some Cat 1s and 2s and, rumor has it, a pro).

Before heading over to the training session, Bob, Brian and I puttered around Trader's Point for an hour, averaging around 17-19 mph. Then, we picked up a couple of other riders and headed out past Brownsburg towards Pittsboro. As we were running a bit behind schedule, Bob picked up the pace and we got a paceline going at about 25 mph. Our group of 6 finally met up with much larger group of riders, and we headed over to recently repaved Pittsboro road, which Bob had marked for a set of VO2 max intervals, followed by mini-races (of about 5.5 miles). We did (or, at least, we were supposed to do) one set of intervals followed by a race going north; and another set of intervals followed by a race going south.

We were broken up into several smaller groups, with stronger riders chasing less strong riders. As the least strong (and, not coincidentally, heaviest) rider present, already tired from riding to the ride, I decided to start on my own at the back. I did my VO2 max intervals, then hooked on to the back of the last group of the three supposedly strongest riders, which included a guy known to me only as "Lungs on a Stick." I actually managed to hang with them for about half the race, but I dropped off after we passed Bill Bahret to ride with him. Eventually, Bill and I met the rest of the group at the northern end of the race.

Immediately, we started back south. For the first mile and a half or so, most everyone was riding easy. Bob said we were supposed to be doing intervals, so I started doing a few more 30" on and 30" off, when all of sudden Bob called out that we had crossed the line for the start of the second race. This time, there were no separate groups. It was gruppo compacto. At first, the pace was pretty reasonable - around 24-to 25 mph. At one point, I actually followed my buddy Jonas Dahlstrom up the outside towards the front, to chase down someone who was breaking away. That was my last mistake. After a minute or two of chasing up towards the front, I determined that I would be better off just sitting in at the back of the pack. So, I pulled off to the outside and was drifting back, when all of a sudden another rider passed me very quickly and closely on the outside. I was spooked, hit the brakes, and the next thing I know, I'm playing a game of catch-up that I could never, ever win.

So, I just hunkered down and kept riding south, toward the Pittsboro truck stop, still a few miles in the distance, at my own pace. The peloton kept pulling farther and farther away from me, until they disappeared entirely from view. As I finally approached the bridge over I-74 just before the truck stop, I saw Coach Bob coming in the opposite direction to collect me. As we rode together, Brian and several others appeared to turn us around for the ride back home, which was uneventful, even pleasant. I got back to my car in the Fishback Creek Elementary School parking lot just as darkness was falling.

It was, for me, an unusually interesting (and lengthy) Tuesday evening ride, quite different from the regularly "Tuesday Night World Championships" at Nebo Ridge. Yes, there was some racing, most of which did not involve me; but there was also some real training, thanks to Coach Bob.

All told, I logged 55 miles (pretty good for a Tuesday evening), with normalized power of 251W and max power of over 850W (which is not bad for a route with no climbing). I believe I am now strong enough to lead Coach Bob and Brian Murphy to their training rides.

Query: Is Libertarianism Compatible with Public Choice Theory?

Are normative theories of libertarianism practicable given the logic of collective action, among other aspects of public choice theory? That is to say, is small government - or what Robert Nozick referred to as "the night watchman state," in contrast to the welfare (or "nanny") state - possible in a world comprised of interest groups seeking and competing for government-provided rents. I have to think someone has taken a serious look at this  issue by now.

Happy 90th Birthday Justice John Paul Stevens

Monday, April 19, 2010

The Monster Raving Loony Party Manifesto

With the UK elections just a few weeks away, voters dissatisfied with both Labor and the Tories have been looking to the Liberal Democrats as a possible solution. But another party is out there deserving closer attention. Today, the Monster Raving Loony Party (MRLP) released its campaign manifesto. According to this report from BBC News, the MRLP and its leader Knigel Knapp are promising several farsighted and novel climate policies for Britain, including air conditioners pointed out of windows to reduce global warming, and bicycles on pontoons for transportation around Central London after sea levels rise.

Hat tip: Gerard Magliocca

"Gladwelled"

That's a new word I learned today from Lea Carpenter in her Big Think review (here) of Walter Kirn's New York Times review (here) of Ian McEwan's new book, Solar (Nan A. Talese 2010).
Gladwelled: the process by which someone almost universally acknowledged as possessing an unparalleled mind (analytic, literary, scientific or otherwise) has his or her intellectual bag of tricks checked once more for security purposes and discovers they contain—at least on this flight—nothing truly dangerous. 

Happy Birthday David Ricardo (1772-1823)

The great classical economist, whose theory of comparative advantage remains a cornerstone of modern economics.

Sunday, April 18, 2010

A Tale of Academic Intrigue

The Guardian reports (here) on the apparent efforts of one academic historian, or his wife, to enhance his own reputation by rubbishing the reputations of other academic historians. Orlando Figes is a prominent historian at Birkbeck College, London. He is married to Stephanie Palmer, a University Senior Lecturer in Law at Cambridge (Girton College). Apparently, Palmer has for several years authored reviews of various books on the history of Russia, using the nom de plume "Historian."

Unabashedly praising the works of Orlando Figes, "Historian" pans the works of other historians of Russia, including the Cambridge-based independent historian Dr. Rachel Polonsky and Robert Service of Oxford University."Historian" also turned her poisoned-pen to attack the work of Kate Summerscale, whose book The Suspicions of Mr. Whicher (Walker & Co. 2008) beat out Mr. Fige's own  work for the prestigious and lucrative Samuel Johnson Prize for non-fiction.

Fortunately, The Guardian reports, lawyers - as usual serving the public interest - have helped to bring the truth (well, at least some of the truth) of the relationship between "Historian" and Professor Figes to light.

This is not the first time academic scandal has emerged from Amazon.com reviews. Perhaps most famously, the conservative scholar John Lott posted favorable reviews of his own works using the name "Mary Rosh" (see here).

Let this story serve as a cautionary tale and a reminder that academia is a mean and nasty profession, present company excluded!

UPDATE: Professor Figes has now admitted (see here) that he, not his wife, promoted his own books and savaged those of rival historians under the pen-name "Historian."

The Weekend in Cycling

The Spring Classics continued this weekend with the Amstel Gold race in Holland. The French were happy because it was won by a Belgian with a French name - which is as close as the French can come to having a winner of their own - Philippe Gilbert. 

Many local riders were in Columbus, Indiana yesterday for the Cereland Classic. Unfortunately, the Cat 4 race was marred by a crash, in which a couple of my teammates, including a close friend, were injured (though not very seriously). These things happen, of course, but they seem to be happening with greater frequency and severity in recent years, which is why I will not race.Aside from the crash, several friends and teammates including Coach Bob and Jason finished well up in the Cat 3s.  

Today, there was more racing at the Mooresville Crit. Coach Bob and one of his teammates from Team CFW, finished 5th and 6th, respectively.

Personally, I rode a very hard 40 miles yesterday with a small group (until I abandoned them to ride back on my own) into a very strong northerly wind of 20-25 mph. Riding home was a lot easier than heading out north, but I still worked pretty hard on the homeward leg. Today, I rode with a somewhat larger but very cooperative group on an "EASY" 50-miler. Thanks to Aaron and Wayde for calling the ride. 

Nothing to See Here

I'm not even going to comment on Arsenal's embarrassment today, losing at bottom-feeders Wigan after holding a 2-0 lead. I will just repeat what I've said before: Arsenal require more strength in depth, especially in defense (including goalkeeper) and at striker. Yes, injuries have taken their toll this season, but all clubs suffer inconvenient injuries. Arsenal simply don't have a deep enough bench to compete for the league title or the Champion's League. Another frustrating season of no silverware. Or, as my father might say, another season shot to hell.

Happy 46th Birthday Niall Ferguson

Among the world's foremost historians of economics and finance. Ferguson's two-volume bio-history, The House of Rothschild (Penguin 1999) is among the very best books I have ever read in any genre.

Saturday, April 17, 2010

Friday, April 16, 2010

Funerals and Polish National Identity

The Polish novelist Olga Tokarczuk has a very interesting and thoughtful op-ed in today's New York Times (here) about how last week's tragic plane crash fits in with the historical Polish narrative of national identity - Poland as the "Christ of Nations" - which she wishes could be changed.

Happy 33d Birthday Freddie Ljunberg

Former Arsenal winger. Member of the "Invincibles" team that went undefeated for the entire 2003-2004 season.

Thursday, April 15, 2010

Nationalize the American Energy Industry?

The usually very smart Berkeley economist Brad DeLong has blown a fuse on the topic of climate policy in  recommending (here) that the American energy industry be nationalized. He writes:
In general I am opposed to state-run nationalized industries: that is definitely the private sector’s place, not the government. But the interaction of rent-seeking politics with the flaws of America’s political system have made me willing to make an exception in the case of America’s oil industry: the increased allocative inefficiency that will flow from government ownership and management is, in my judgement, likely to be much less than the increased political efficiency that will flow from no longer having the energy industry able to purchase enough Representatives and Senators to block needed policy moves that it fears will be adverse to its interests. So nationalize—not to expropriate or to penalize the shareholders, but to get this particular selfish and destructive political voice out of American governance.
Aside from my general skepticism about the wisdom of nationalization (which DeLong says he usually shares), there is a fundamental logical problem with his argument: If the energy industry is politically powerful enough to block meaningful climate regulation, then why wouldn't it be politically powerful enough to block outright nationalization?

Aside from that problem, government ownership of energy companies would likely result in regulatory conflicts of interest, which have historically arisen whenever governments have attempted to regulate, e.g., for environmental protection, industries in which they hold a direct economic stake. Invariably, the regulators lose out to other bureaucrats who want to maximize production. For that reason (among others) it really is best for polluting companies to be privately owned but government regulated.

Penny Wise and Pound Foolish at IDEM

Earlier this week, the Indiana Department of Environmental Management (IDEM) announced that it would implement budget cuts ordered by the Daniels Administration in part by cutting off funding for mercury monitors throughout the state (see, e.g., here). The expected savings are pretty meager at $285,000. Meanwhile, by curtailing funding, the state loses matching funds from the federal government that paid for half the costs of the mercury monitors.

Mercury is a dangerous neurotoxin that bioaccumulates when ingested. Mercury emissions from Indiana power plants do not fall far from their sources, and are found in high concentrations in local populations of fish that are consumed by Indiana residents. Mercury ingestion is associated with learning disabilities that create especial risks for pregnant women and young children. In fact, IDEM's website still has posted (here) an advisory on fish consumption for those  sensitive subpopulations.

Mercury emissions have been and continue to be higher in Indiana than most other states, in large part because of our heavy reliance on dirty-coal-fired power plants. Indeed, Indiana's mercury monitoring network  has recorded some of the highest readings of any state mercury monitoring network in the country. Perhaps that is why it is being shutdown, using the convenient fig leaf of budget savings.

The Daniels Administration, which has done a fair job managing the state in various other respects, has an abysmal record on environmental protection. The governor, and even IDEM's Commission Tom Easterly, seem to view environmental laws and regulations as little more than nuisances to business and industry that are to be ignored or circumvented to the greatest extent possible. No doubt, they would use budget problems as an excuse to shut down IDEM entirely, if they did not fear the federal EPA more than the state agency.

Happy Birthday Leonardo da Vinci (1452-1519)

Happy 13th Birthday Son of Cyclingprof

Wednesday, April 14, 2010

Clare Hall Reunion, Chicago 2010

Yesterday's Clare Hall, Cambridge reunion at the University of Chicago Business School was a great success. Life members and former graduate students came from throughout the Midwest to meet Clare Hall's new president, Sir Martin Harris, who gave a very nice talk about current happenings in the college. The highlight of the evening was a fascinating presentation by Life Member Robert Rosner, Professor of Astrophysics at the University of Chicago and Director of the Argonne National Laboratory, about how interdisciplinary teams of scientists, combining the incomplete facts of astronomy, basic physics, and computer simulations, managed to figure out for the first time how Super Novae move from ignition to explosion.

Here is a picture featuring (from left to right), your's truly, Sir Martin Harris, Bob Rosner, and Andy Klein, who deserves great credit for organizing the event.

Spurs 2 - Gunners 1

Arsenal are now surely out of the title race, having lost 2-1 to Tottenham at White Hart Lane. The Gunners played with zero urgency until the game was virtually out of hand. Their defense, already hampered by injury, suffered another blow as Thomas Vermaelen went out in the first half with the calf problem. That left the aged and slow duo of Sol Campbell and Michael Silvestre in central defense (if one could still call it that). The only bright spot was the return, late in the second half, of Robin van Persie, Arsenal's top striker, who has been out of action for most of the season. Van Persie would have scored three goals but for excellent saves by the Spurs keeper.

Bottom line: No silverware for Arsenal again the season. Wenger must - I repeat must - strengthen and deepen his side for next year.

Happy 89th Birthday Thomas Schelling

One the most impressive scholars and nicest individuals I've been fortunate enough to know.


Tuesday, April 13, 2010

Monday, April 12, 2010

The Most Interesting Thing I Read Today

In light of the recent controversy over the reaction of Supreme Court Justice Samuel Alito during President Obama's State of the Union address, consider this excerpt from John Milton Cooper, Jr's Woodrow Wilson (Knopf 2009, p. 385)). President Wilson is making a speech to a joint session of Congress in April 1917, asking for a congressional declaration of war against Germany. 
When Wilson rejected 'the path of submission,' Chief Justice Edward White, who was sitting in the front row, dropped the big hat he was holding and raised his hands above his head to give an explosive clap. That broke the suspense. The chamber erupted into a prolonged road of applause and then lapsed back into silence.

Wilson now came to the action portion of the speech, which he introduced in a somber tone, noting the 'profound sense of the solemn and even tragical character of the step that I am taking.' He advised Congress to declare that a state of war existed between the United States and Germany. At this point, the chief justice, with tears streaming down his cheeks, again led the applause with his hands above his head.

Clare Hall Reunion in Chicago

Tomorrow, my colleague Andy Klein and I are heading to Chicago to meet and greet current Clare Hall (University of Cambridge) President Sir Martin Harris at a reunion of the college's Life Members.

Dr. Robert Rosner, Professor of Astrophysics at the University of Chicago and Director of the Argonne National Laboratory, will make a presentation on "Blowing up stars in one's office," examining how modern astrophysics deals with one of the classic unsolved problems of astronomy: why and how do certain stars become supernovae? 

Kudos to Professor Klein for organizing the event.

A Libertarian "Golden Age"?

The very smart scholars over at Crooked Timber (here) have a fascinating series of posts on the myopia/ignorance of libertarians who claim the 1880s as a "golden age" of individual liberty in the US. Indeed, it was a golden age, but only if you were white, adult, and male. Otherwise, not so much.

Libertarians who want to be taken seriously, should be careful about comparing epochs. Less government regulation of business or land use and lower taxes do not necessarily equate to more freedom for everyone.

Kristin Johnson on the Institutional Structure of Credit Default Swap Markets

Lin Ostrom alerted me to an interesting looking working paper by Seton Hall Law Professor Kristin N. Johnson, "Things Fall Apart: Regulating Credit Default Swaps in the Battle of Man vs. the Gods of Risk." Here is the abstract:
Financial markets provide an invaluable national and international infrastructure resource that reflect attributes similar to a commons, as described in property law literature. The story of credit default swaps illustrates this analogy. Traded in an openly accessible, non-rival and nonexcludable market, credit default swaps engender important economic benefits. Abuse of the market creates negative externalities that are not internalized by market participants; rather, the costs are borne by society. Commons scholars’ empirical research suggest that community rule-making and policing offers the most effective reform to sustain the desirable resource. This Article proposes the creation of a federally registered self-regulatory organization (SRO). To ensure that the SRO adopts sufficient checks and balances to monitor systemic risk, this Article suggests that a council of domestic federal agencies retain supervisory authority over the credit default swap SRO. Finally, this Article posits that collaboration among international securities regulators is imperative for any noteworthy victory in the battle against the gods of systemic risk.

Johnson's treatment of the credit default swap market as a kind of commons is intriguing, as is her recommendation of federally registered self-regulatory organizations to minimize risks of systemic market failures. What I missed, however, was a nuanced assessment of design principles for predicting when such SROs might fail or succeed over time. In her groundbreaking 1990 book Governing the Commons (Cambridge), Elinor Ostrom noted that common property regimes fail about as often as they succeed at sustaining common pool resources (CPRs) over time; and she offer "design principles" for predicting success and failure. Unless Johnson expects SROs to be always successful, which (a) seems doubtful and (b) would vitiate her analogy to CPRs, then she needs to develop a similar testable model.

Happy 70th Birthday Herbie Hancock

One of the true greats.Here he is with a very distinguished quintet playing "So What."

Sunday, April 11, 2010

Sunday ride

After watching Cancellara destroy the field in Paris-Roubaix, I met friends and teammates for relatively fast-paced "recovery" ride. The weather today in Central Indiana is absolutely gorgeous, with temps nearing 70(F) and winds much lighter than yesterday. We had about 14-16 in the group today, and everyone was in good spirits and well-behaved. Only a few times did someone attack, taking speeds over 30 mph. And everyone always regrouped nicely after the attacks.

All in all, it's been an excellent weekend of riding. After recent respiratory troubles, I'm happy to get in 100+ miles for the weekend without having coughing fits.

Now, back to class and exam preps.

Fabulous Fabian

Cancellara does it again. Today, at Paris-Roubaix, he simply rode away from a select group of riders with 50 km to go and soloed to the finish. Not only was the group, which included the likes of Tom Boonen, Thor Hushovd, and Pippo Pozzato unable to real him in, but Cancellara continuously increased his lead, winning by 2:30 in the end. This is the second time he's won Paris-Roubaix, the toughest one-day bike race in the world, and he is the first rider in quite some time to win both the Tour of Flanders and Paris-Roubaix in the same year. Winning any bike races in consecutive weeks is an impressive feat; winning those bike races in consecutive weeks is super-human.

UPDATE: Here's what Cancellara had to say about his decisive attack: "
when I came through the Mons-en-Pevele cobbled sector I decided I would be going all the way to the finish on my own." Here's what second-place Thor Hushovd had to say about Cancellara's attack: "I think when Cancellara went everyone understood pretty quickly that we wouldn't be catching him." And here's what third-place Juan Antonio Flecha had to say: "Cancellara's strong, but he also had the balls to attack from as far out as he did. For me, he's a great champion." All quotes come from this story at BikeRadar.com.

Happy Birthday Charles Evans Hughes (1862-1948)

Associate Justice of the US Supreme Court (1911-1916), later Chief Justice (1930-1941).

Saturday, April 10, 2010

Saturday Rides/races

It was a beautiful, though somewhat blustery, day for a ride today. A small group met at Fishback Creek Elementary School, rode up to Zionsville High School, which was the starting point of a much larger group ride sponsored by the Central Indiana Bicycling Association (CIBA). From Zionsville we rode a familiar route north to Elizaville, then south and west to Lebanon, then south and east to Whitestown, before deviating from the CIBA route and heading back to Fishback Creek. During the ride, temperatures warmed from the mid-50s to the upper-60s, and the SW winds picked up to 13-17 mph. With the winds at our backs heading north, we were hitting speeds of 30-31 mph without working very hard. Coming back home was a very different story, as we struggled against headwinds and crosswinds to sustain speeds of 15-17 mph. My legs actually felt stronger  after we turned into the wind, so, unusually for me, I took a fair share of pulls at the front. Normalized power for the ride was 248W. Kudos to David, Tim W., Kenny and Tommy for an excellent "Tour of the Boonies."

Post-ride, I'm tired and sore. Don't know what I'll have in the tank for a ride tomorrow, but we'll see.

In other Saturday cycling news, Coach Bob rode in some bad luck in the Master's race at the Hillsboro Roubaix. After missing out on the decisive break (which apparently many riders had thought would not be the decisive break), a flat tire put Bob out of the running. These things happen, of course, and it's just a matter of time before Bob's climbing on to the top of the podium this season.

Plane Crash Kills Polish President

Various news outlets in Europe and the US are reporting that Polish President Lech Kaczynski, his wife, and several high-ranking Polish officials, including former president-in-exile (during World War II) Ryszard Kachorowski, were killed when the plane carrying them crashed while landing at an aiport in Russia. They were on their way to commemorate the anniversary of the infamous (though long denied) Russian mass-murder of more than 20,000 Polish army officers, officials, and members of the intelligentsia in Katyn in 1940.

This is a great shock for Poles and friends of Poland everywhere. Fortunately, Poland's current Prime Minister, Donald Tusk, was not on the plane; nor was Foreign Minister Radoslaw Sikorski.

Happy Birthday Hugo Grotius (1583-1645)

Often referred to as the "father" of International Law, I prefer to think of him as one of the fathers of that field, so as not to forget others such as Andrzej Frycz Modrzekwski (1503-1572), who influenced Grotius.

Friday, April 9, 2010

An Amazing Sentence

Of all the people in human history who ever reached the age of 65, half are alive now." From Fred Pearce, "The shock of the old:Welcome to the elderly age, New Scientist, Apr. 8, 2010 (here).

Hat tip: Tyler Cower at Marginal Revolution.

Riding/racing Weekend

A busy weekend in bicycle racing, locally and internationally. Internationally, we have Paris-Roubaix, also known as the "Hell of the North," which is probably the toughest one-day bike race in the world, across the cobbles of northern France and southern Belgium. It's such a tough race, that teams use specially-reinforced bikes, with longer wheelbases with wider tires. Here is the parcourse:




Boonen has promised to exact revenge on Cancellara this weekend, but anyone who bets against "Spartacus," as he is known in the peloton, is either a fool or a knave. If you're looking for an unexpected winner out of the pack, consider Garmin-Transition's Martijn Maaskant, who has finished well in Paris-Roubaix the last couple of years.

To watch Paris-Roubaix live on the internet on Saturday morning, check out the listings here. Versus will carry tape-delayed coveraged on Sunday from 6-9.

On the local racing front, several of my friends and teammates will be riding the Hillsboro Roubaix in western Illinois. I wish them all a strong, fast, and, most importantly, safe ride.

My own cycling plans for the weekend do not (in fact, never) include racing. I'll be content to get a couple of longish rides in with some friends. Yesterday evening, I had a decent outdoor training ride for the first time since coming down with bronchitis (or whatever it is that's causing my respiratory problems). Today, I plan to do some interval training, along with an VO2max test (5 min. max effort). A couple of 40 or 60-mile endurance rides on Saturday and Sunday would make me very happy.

Happy 65th Birthday Steve Gadd

Chick Corea put it best: "Every drummer wants to play like Gadd because he plays perfect ... He has brought orchestral and compositional thinking to the drum kit while at the same time having a great imagination and a great ability to swing." Listen particularly to Gadd's great playing on the title tracks to Corea's The Leprechaun and Steely Dan's Aja, not to mention Paul Simon's "50 Ways To Leave Your Lover."

In this video, Gadd is playing Chick Corea's "Spain" with Al Jarreau's band. Check out his solo in the middle of the song. Amazing.

Thursday, April 8, 2010

Krugman on Climate Policy

In case you missed it, Paul Krugman published this very thoughtful piece on climate policy, and environmental policy more generally, in last Sunday's New York Times Magazine.

Markell and Ruhl: Empirical Assessment of Climate Litigation

Dave Markell and J.B. Ruhl (both of Florida State University College of Law) have posted (here) "An Empirical Survey of Climate Change Litigation in the United States." Here is the abstract:
A quickly growing number of commentators have suggested that the domestic U.S. courts are already significant drivers of climate change policy, and their role is likely to increase. Carol Browner, Director of the White House Office of Energy and Climate Change Policy, for example, has suggested that “the courts are starting to take control” of climate change.

In addition to fashioning law on their own, judicial decisions have significant implications for the work of the other branches, For example, in characterizing the Second Circuit’s recent decision in Connecticut v. American Electric Power a significant victory for activists because of its favorable holdings on standing and justiciability grounds, Professor Richard Lazarus notes that a major challenge for “environmentalists” is “how best to use this win to help promote meaningful climate change legislation in Congress and regulatory action by EPA, where the issues will best be addressed.”

The foundational gap we seek to begin to fill in this Article is an empirically-based chronicling of climate change activity in the judicial arena. In particular, we have reviewed, and coded for a broad variety of attributes, every climate change case that has been resolved to date (through December 31, 2009); and, if a case has been filed but no resolution has yet been reached, we have reviewed (and coded) the complaint and other documents in the court docket. In all our study covers over 130 active or resolved pieces of climate change litigation.

We hope that this project will contribute in two important respects to understanding of the action in the courts on climate change to date. First, we compile and present basic information about the cases brought to date (e.g., the types of cases, where they have been brought, the types of plaintiffs and defendants involved, and the outcomes). In addition, we provide an additional layer of analysis through our synthesis of this information and our identification of trends that have emerged thus far. Our purpose in this Article, in short, is to present an empirically-based picture of what one New York Times headline describes as courts serving as “battlefields” in “climate fights.”

Adler on Prizes to Reward Climate-Stabilizing Innovations

A few years ago, in a luncheon buffet line at the annual meeting of the International Society for New Institutional Economics in Toronto, Lee Benham, an Economics professor at the Washington University in St. Louis, turned to me and said that the only policy needed for greenhouse gas mitigation was to establish a prize for technological innovations that would ameliorate climate change.

Now, Jonathan Adler of the Case Western Research University School of Law, has published a working paper (here) called "Eyes on a Climate Prize: Rewarding Energy Innovation to Achieve Climate Stabilization." Adler's paper puts a lot more meat on the bones of Benham's simple assertion, providing a historical context for assessing the potential utility of prizes (essentially, cash awards) in climate policy. Also, in contrast to Benham, Adler expressly recognizes that prizes cannot be a panacea for climate policy; his more nuanced argument is that they have been under-utilized in the climate-policy max. I might nit-pick that nearly all policies have been under-utilized so far in climate policy, such as it is. But Adler's point that prizes could make a significant difference is well taken. 

The Cubs' Quest for Consistency

The baseball season has just begun, and the Chicago Cubs seem to be experimenting with various ways to lose ballgames. I expect they'll soon find a way they prefer and stick with it.

Happy Birthday Sir John Hicks (1904-1989)

Another one of the great economists of the 20th century. In his landmark book, Value and Capital (1939), Hicks laid the foundations for a workable conception of sustainable development by defining income as the maximum amount an individual - or, to generalize, a society - can consume over a period of time and still be as well off at the end of the period as at the start.

Wednesday, April 7, 2010

Happy 95th Birthday Albert Hirschman

I almost missed this today, but better late than never. Hirschman is perhaps the greatest living economist (though, like Herbert Simon and Thomas Schelling, he was more of an all-around social scientist than simply an economist) not to have been awarded the Nobel Prize. Everyone should read his enduring classic Exit, Voice and Loyalty (Harvard 1970). For a brief bio, see here.

FT: Europe's Carbon Market Is Resilient

In 2005, the European Union's (EU) Emissions Trading Scheme (ETS) began a test phase, in which emissions credits were over-allocated, resulting in a price collapse in late 2006. In Phase II of the ETS, which began in 2008 (and runs through 2012), the European Commission (EC) more carefully screened National Allocation Plans to control for over-allocation of credits and to ensure compliance with member state emission reduction targets under the Kyoto Protocol and the EU's own Burden-sharing Agreement.

The global economic downturn created concern that the ETS would fail once again to reduce emissions because emissions allocations would not be scarce. Indeed, just before Easter, the EC issued data indicating that the carbon market was over-supplied with emissions credits mainly due to an 11 percent reduction in energy use from 2008 to 2009. Needless to say, environmentalists were not pleased.

However, something unexpected happened. According to today's Financial Times (here) carbon credit prices did not drop. In fact, they have risen slightly since Easter to 13.50 Euros. The reasons: first, unlike in 2006, the market had already accounted for the economic downturn in carbon permit prices, so the EU's data did not take market participants by surprise; second, and perhaps more importantly, unlike carbon permits in Phase I, Phase II carbon permits issued this year will not be expiring soon, but remain useful until 2012 (and possibly beyond). Thus, short-term economic fluctuations have less of an impact on carbon permit value.

Apparently, the EU learned some important lessons during Phase I of the ETS, and has implemented those lessons to good effect in Phase II. The institutional tweaks have made the ETS a more resilient and effective market-based program for reducing carbon dioxide emissions.

Celebrity Culture in the Legal Academy (and Beyond)

Chief Justice John Roberts, of the United States Supreme Court, is visiting the law school today. Along with him, of course, comes a big security presence and near hysteria among law school administrators and more than a few of my colleagues. Without doubt, Supreme Court justices are celebrities, and they are almost all really smart people. What's interesting though, is that sitting justices are more or less prohibited from saying anything interesting about the law, except in their written opinions. With the notable exception of Justice Scalia, who doesn't seem to care as much about perceptions of bias, and seemingly would never recuse himself from any case based on informal remarks he might have made, pretty much all sitting justices can do is recite pablum about the greatness of the constitution, the legal system, the rule of law, and the Supreme Court itself. We can all agree with them about that, but we don't really learn anything significant from attending a lecture by a sitting Supreme Court justice; all we do is bask in the glow of their black-robed stature. We can ask them tough questions, but they generally cannot (or will not) answer them. We certainly cannot contradict anything they say.

That last remark, by the way, is well-exemplified by an anecdote from a conference I attended several years ago, where a famous US appellate court judge made the following assertion (which I paraphrase): judges always successfully cabin their biases and preferences, so as to apply the legal rules neutrally to the facts. This assertion was not made to a group of 8th graders in Civics class, but to a room full of legal scholars and social scientists, including at least one Nobel laureate. The social scientists squirmed uncomfortably at the judge's remark; a couple even began to smirk, but quickly stopped when they noticed the dead silence throughout the rest of the room. No one - least of all the legal scholars - dared to challenge the judge's patently absurd statement. It's simply a status issue - the academic version of "The Emperor's New Clothes."

Stature, of course, is a very big deal in the academia - perhaps even a bigger deal in the legal academy and economics departments than most others. What schools you graduated from determine the limits of your mobility, pretty much regardless of the quality of your work. Where you teach largely controls which journals will be willing to publish your scholarship, and can affect the quality of conference invitations you receive. Likewise, Justice Robert's talk here today enthralls us and, probably, the local media as well almost entirely because of his professional stature. Much less (that is to say, virtually no) excitement would attend a similar visit from any lower federal court judge (where a lot more real legal work is done than on the Supreme Court), let alone a state-court judge.

I was thinking about all this today, as I was leafing through my daily e-mail update from the Proceedings of the National Academy of Sciences, which is filled with many fascinating and significant scientific and social-scientific work by scholars and scientists I have never heard of, and who have never heard of me. For all our celebrity culture, it is useful to recall, at least once in a while, that most of the heavy lifting in science and social-science is not being done by the small number of "stars" in each discipline - which is not to diminish the quality or importance of their contributions - but by a multitude of dedicated, hard-working individuals, most of whom never receive great accolades for their contributions to the stock of useful knowledge.

Kaletsky: Only a Hung Parliament Can Put Britain's Fiscal House in Order

The always interesting Anatole Kaletsky has a column in today's Times (here), in which he argues that a hung Parliament (one in which no party holds a clear majority) would be the best outcome for the UK from the upcoming May 6th elections. In order to do the "heavy lifting" that needs to be done to put Britain's fiscal house in order, a government comprised of any single party - and neither Labour, the Tories, nor the Liberal Democrats deserve that honor, according to Kaletsky - would have to possess "a clear mandate and a strong majority," which is "almost inconceivable." Thus, Kaletsky pins his hopes on a relatively weak, coalition government: 

Consider now what would happen in a hung Parliament. The government that emerged might be led by Mr Cameron, or much less probably by Mr Brown. It might be an official coalition or, much more probably, a minority administration in which the Lib Dems consistently voted with the government only on budgetary issues and votes of confidence.

But in any of these circumstances, key economic and constitutional decisions would have the backing of a large parliamentary majority and a mandate from 60 per cent of the voters. The interest groups who opposed such a government — whether trade unions or industrial lobbies — would be defying the will of a clear majority of voters.

What Does the New Health Care Reform Law Actually Do?

The Kaiser Family Foundation has a useful, easy-to-understand summary here.

Hat tip: Brad DeLong's Semi-Daily Journal

Happy Birthday 48th Andy Hampsten

A great American cyclist, and the only and non-European ever to win the Giro d'Italia. The picture below shows him riding through a blizzard on the Gavia pass in 1988, on his way to taking the pink (leader's) jersey.

Tuesday, April 6, 2010

Messi 4 - Arsenal 1

It is a gross understatement to say that Lionel Messi is "great." Today, he personally escorted Arsenal out of the Champion's League with four beautiful goals, including a first-half hat-trick. Arsenal briefly held a 1-0 lead, thanks to a second-chance effort from Niklas Bendtner, but Messi (and 10 other, largely unnecessary players for Barcelona) quickly and decisively turned the tables on an injury-weakened and over-matched Arsenal 11.

Now, the Gunners have nothing left but to chase down Chelsea and ManU for the Premier League title. Given their ongoing injury woes, it's going to be a tough ask. Hopefully, in preparation for next season, manager Arsene Wenger will have realized just how large is the gap in quality and depth between his side and Barcelona, and will bring in some fresh talent to help to close that gap.

UPDATE: Arsenal manager Arsene Wenger has conceded that he must buy players to strengthen his team for next season, if the Gunners are to compete with the likes of Barca (see here).

Hovenkamp on "Coasean Markets"

Recently, I posted a blog (here) about (among other things) Herbert Hovenkamp's working paper on "Coase, Institutionalism, and the Law & Economics Movement.," which I very much liked. Earlier, Hovenkamp posted a paper on "The Coase Theorem and Arthur Cecil Pigou." Now comes a new working paper from Hovenkamp on "Coasean Markets." Obviously, Herbert Hovenkamp is writing a book about Ronald Coase and his influence on the modern law and economics movement.

When I first saw the latest working paper, it's title gave me pause. I had never before seen the phrase "Coasean Markets," but it smacked of locations where "Coasean bargaining" occurs, and faithful readers of this blog will know that I detest that later phrase because (1) it misinterprets what Coase was trying to say about the importance of transaction costs and (b) cannot be distinguished in any meaningful and non-pernicious way from bargaining simpliciter (see, e.g., here and here). After my initial pause at the title, I became hopeful that Hovenkamp, through the device of "Coasean markets," might be able to provide some useful content to "Coasean bargaining." Alas, my hopes were dashed.

In Hovenkamp's interpretation, "Coasean markets" are a subset of all markets - although it's not at all clear just how they are distinguished from larger markets. However, they seem to be places where (a) bargaining will costlessly transfer goods to highest and best uses, unless transaction costs exist, in which case (b) parties must compare the costs of operating in the "Coasean market" with the costs of leaving the market for "Coasean firms" or other institutional arrangements. This seems to me not to solve the problems of "Coasean bargaining" I have previously discussed but to participate in them.

Several discrete assertions in Hovenkamp's new paper give the game away, and reveal that "Coasean markets" do not resolve but is based on the same interpretive errors as "Coasean bargaining." For example, on page 18, Hovenkamp asserts that "Coase's work has been repeatedly criticized for its failure to develop any theory of bargaining other than the naked assertion that if there are gains to be had from trading to a final resting point such trading will occur." This claim about Coase's "naked assertion" is simply not accurate. It is true that Coase has been "repeatedly criticized" for making such an assertion, but it is an assertion Coase never made. Coase never said that free-market bargaining would always operate to maximize economic value. What he did assert is that such bargaining would always occur in the mythical world of zero transaction costs, under the standard assumptions of neoclassical economic theory (which Coase was concerned to criticize). The bulk of Coase's theory of social costs is premised on the notion that transaction costs are not zero - in fact, they are ever-present and often quite high - and, therefore, market transactions/bargaining will not always move goods to their socially efficient uses. That's precisely why legal rules (re)allocating entitlements can matter. So, contrary to Hovenkamp's assertion, Coase has a theory of bargaining in real, existing markets - that is, when bargaining can be expected or not be expected to occur - which is based on transaction (as well as other) costs as compared to expected gains from trade.

Hovenkamp also misrepresents Coase's views on government intervention in markets. On page 5, he avers  that Coase "has never had any patience for the view that government intervention via involuntary transfers of resources can increase welfare." Again, this is simply not true. Perhaps Hovenkamp missed Coase's statement in his 1959 article on "The Federal Communications Commission" (Journal of Law and Economics 2:1-40, at 29) that "When large numbers of people are involved, the argument for the institution of property rights is weakened and that for general regulations becomes stronger." Coase cited, as an example, pollution, and clearly implied that at least sometimes (if not as often as those such as Pigou supposed) government might more efficiently allocate entitlements by regulation. Coase makes a similar point in "The Problem of Social Cost," which Hovenkamp could not (or should not) have over-looked, when he writes (on page 117 of the version included in his book The Firm, the Market, and the Law (Chicago 1990)) that the government "has powers that might enable it to get some things done at a lower cost than could a private organization." Of course, he again notes that "governmental administrative machinery is not itself costless." Thus, Hovenkamp's assertion about Coase's "impatience" with governmental (re)distribution is not accurate.

In part, Hovenkamp gets Coase wrong on the question of government intervention because Hovenkamp exaggerates the scope of Coase's disagreement with Pigou. Hovekamp asserts (on page 5) that "The Problem of Social Cost was written in large part as a critique of ... Pigou's arguments for government intervention." It is true that Coase was very much concerned to critique Pigou. It is also true that Coase saw less scope for government intervention than Pigou and many other welfare economists. However, Coase did not purport to overturn the entire structure of Pigou's welfare economics. Instead, Coase's goal was more limited: to correct welfare economics by pointing out that the mere existence of an externality could not justify government action to internalize it because sometimes the transaction costs associated with internalizing the externality might exceed the benefits. Nowhere did Coase ever claim that inefficient externalities should not be internalized. Put in general terms, Coase's position is that the costs of government intervention had to be compared with the costs of leaving the externality (a.k.a., market failure) alone, if social welfare was to be maximized.

In the final analysis, I must place Herbert Hovenkamp's concept of "Coasean markets" along side "Coasean bargaining" into the trash bin of Coasean misinterpretations of Coase. Both concepts are partly vacuous, partly pernicious, and misrepresent what Coase was concerned to argue.

UPDATE: Professor Hovenkamp informs me that he is, indeed, writing a book, but it is not actually about Coase per se  (he has just gotten a bit "stuck" on Coase's theories in the course of his work). Rather, it is entitled, The Marginalist Revolution in American Legal Theory, 1880-1970. Sounds like it should be most interesting.

Butler Wins!

I know, I know. They didn't actually beat Duke in the national championship game last night, but Butler is still a winner. The kids played smart, with heart, and with class. Their poise in interviews before and after the game was extremely impressive. They did their college and Indianapolis proud.

Happy Birthday James Mill (1773-1836)

Father of John Stuart Mill, friend of David Ricardo and Jeremy Bentham, and an important political economist in his own right.

Monday, April 5, 2010

The Social Cost of Carbon Under Executive Order 12,866

Executive Order 12,866 is the current mandate under which federal executive-branch agencies must prepare regulatory impact analyses (RIAs, which are basically a form of cost-benefit analysis or CBA) when proposing major new rules or rule modifications. On March 9, 2010, the Department of Energy published (here) in the Federal Register (75 Fed.Reg. 10874-10948, Mar. 9, 2010) a new final rule (codified at CFR Part 431) on energy conservation standards for small electric motors. The new rule's regulatory impact analysis includes a discussion of the social cost of carbon, which is based on a document attached as Appendix 15A to the final rule. That document, "Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12,866," is the result of an interagency consultative process involving the Environmental Protection Agency, the Councils of Economic Advisors and Environmental Quality, the Departments of Agriculture, Commerce, Energy,  Transportation, and Treasury, the National Economic Council, and the Offices of Energy and Climate Change, Management and Budget, and Science and Technology Policy.

The interagency cost estimates are summarized in the following table:

Table 15A.1.1  Social Cost of CO2, 2010-2050 (in 2007 dollars)

Discount Rate
5%
3%
2.5%
3%
Year
Avg
Avg
Avg
95th
2010
4.7
21.4
35.1
64.9
2015
5.7
23.8
38.4
72.8
2020
6.8
26.3
41.7
80.7
2025
8.2
29.6
45.9
90.4
2030
9.7
32.8
50.0
100.0
2035
11.2
36.0
54.2
109.7
2040
12.7
39.2
58.4
119.3
2045
14.2
42.1
61.7
127.8
2050
15.7
44.9
65.0
136.2
Source: Interagency Working Group on Social Cost of Carbon, United States Government, “Appendix 15A: Social Cost of Carbon for Regulatory Impact Analyses Under Executive Order 12,866” at 2.

I have not yet had occasion to work through the 53-page analysis to assess the quality of the social cost of carbon (SCC) estimates - needless to say, they are inherently contestable - but they appear at first blush to be fairly consistent with other estimates I've read of the social cost of carbon. According to the table, the new auto fuel efficiency standards EPA set at the end of last week (and about which I blogged here) would seem to be cost-justified, at least using a 3% discount rate.

What is not clear is why the interagency estimates of the social cost of carbon (SCC) have been kept so secret. They have not been separately published, or even publicized. As far as I am aware, the only place one can read them is (here) in the appendix to the March 9, 2010 Department of Energy (DOE) rule referenced  above. I only learned about their existence last night, when Dan Farber (Boalt Hall, Berkeley) forwarded me a copy of the appendix from the DOE rule.

I may have more to say about the interagency SCC estimates later, after I've had a chance to read through the entire analysis. I may also blog once again about why I think precise SCC estimates are not nearly as important at this point in time as establishing  institutional structures to start moving carbon dioxide emissions in the right direction to stabilize the climate.