Practice what you preach sentence of the day

From Daniel Gross’s NYtimes review of Jeffrey Sachs’ “Common Wealth”,

In an age when we don’t need to have lots of children to work the fields, or to compensate for high infant mortality, Sachs argues that it’s both economically rational — and crucial for a future of sustainable growth — for people to reproduce at a rate close to 2.1 children per family. In his acknowledgments, Sachs thanks his three children.

I’ve been halfheartedly making my way through Sachs’ book, and I think Gross hits the nail on the head when he says, “Sachs too frequently lapses into a sort of reductio ad PowerPoint”. And “frequently lapses” is being generous. For this reason this book makes a much better reference than a read. Usually I find Tyler Cowen’s short book reviews obnoxiously pretentious, but halfway through “Common Wealth” I’d have to say this is a pretty accurate description,

my browsing of this book never gave me the feeling that I had access to the mind of Jeffrey Sachs. It doesn’t even read like a popularization. Imagine a smart and diligent but not insightful or self-reflective person doing a “color by numbers” version of what a Jeffrey Sachs book should read like.

How did we get scooped on this one?

John Whitehead beats us to the punch:

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ToC: Washington Metro Edition

One of the most interesting aspects of Washington, DC, is the fact that any planning decision falls at a nexus of federal, local, and Maryland and Virginia state interests.

I’ve been reading The Great Society Subway, a history of the Washington Metro system written by George Mason historian Zachary Schrag. The book delves into the nitty-gritty of the planning process; some of the most interesting bits are the intense political struggles.

Washington is not the only American city that has built a postwar rapid transit system (see: BART). However, it is unique in that the federal government, local authorities, Maryland, and Virginia all held a dear interest in its design and construction. Building such a system reminds one of the importance of political economics. The relevant commissions and authorities could not simply design a system that optimized ridership while minimizing net costs and impose it on the region:

Even with the federal government paying the bulk of the expense, local jurisdictions still needed to divide up the local share of the cost. On the one hand, if each jurisdiction paid only for the portion of the system on its own territory, there would be an enormous incentive not to build, and instead to bus one’s citizens to the county line and let them ride someone else’s train into work. One the other hand, if each jurisdiction paid a fixed proportion of the total system regardless of the amount it chose to build itself, a tragedy of the commons would arise: each would be tempted to build as large and extensive a system as it could, knowing that the additional expense would be diffused across the region.

An intermediate cost-sharing solution was eventually designed, and the disproportionately common downtown DC infrastructure was folded into the project’s general expenditures. Although DC faced unique political constraints on its urban policy, this is an instance in which the federal government’s inherent interest made the process more tractable. Hmmm…are there any other tragedies of the commons to which this lesson might apply?

Thoughts on Krugman

I saw Paul Krugman speak last night as he promoted his new book, The Conscience of a Liberal.

Krugman and the “interviewer”, E.J. Dionne of the Washington Post and Georgetown University, talked mostly about Krugman’s concept of the “Great Compression”, the period after WWII during which the income distribution in the U.S. scrunched up considerably. It was sort of scattered, and Dionne often commandeered the conversation. This was okay, as Dionne is an interesting scholar in his own right, but I definitely went to hear the thoughts of his interviewee.

Tragedy of the art commons

I recently read Tyler Cowen‘s new book Discover Your Inner Economist. (Short review: Thought provoking, life affirming, and funny. Read it.) In a chapter on appreciating culture, he notes the dangers that overexposure poses to our appreciation for great art:

…honestly I don’t know how good the Mona Lisa is, and I don’t even know how I could know.

I am not invoking postmodern skepticism about the arbitrariness of objective value standards. … When it comes to the Mona Lisa, it is hard for any American or European today to look at the picture with fresh eyes. …

Economists call this phenomenon “the tragedy of the commons.” A tragedy of the commons occurs when individual actions, taken together, destroy the value of an asset or resource.

Tragedy of the commons problems arise among common pool resources, whose defining characteristics are that they are non-excludable (everyone has access to them) and rivalrous (my use of the resource diminishes everyone else’s ability to use it). Fisheries are a classic example: they are an open-access resource which anyone can take from, but the more fish I take, the less there are left for you to take (and, what’s worse, the less there are left for everyone (both you and me) next year when the now-reduced population can’t produce as many offspring).

Cool It, by Bjorn Lomborg

I just finished Lomborg’s latest. Several excellent reviews have already been written: I particularly commend this review from Salon, Partha Dasgupta’s thoughts, and, finally, the inimitable Tyler Cowen.

There’s so much quality there I hesitate to add anything, but I think I can provide a couple additional thoughts.

First, to my mind this is most important and interesting thing the book says:

At the end of the day, if cutting CO₂ costs twenty dollars per ton, the rich world might be willing to make some — if often symbolic — cuts at high price, but it is extremely unlikely that China, India, and the other developing countries will get on board. What we need to do to tackle climate change is to make this cost drop dramatically. If we could cut CO₂ for, say, two dollars per ton, it would be much easier to get everyone to cooperate on massive cuts.

This is why I suggest that a much more appropriate response to climate change would be a worldwide commitment to R&D for non-carbon-emitting energy technologies, aiming to lower the costs of future CO₂ cuts. …

We should commit ourselves to spending 0.05 percent of GDP in such R&D… .

Although an emphasis on R&D is sometimes mocked as a tactic for delaying cuts in emissions — perhaps because of its association with certain current world leaders — there is actually a strong economic case for R&D subsidies. For example, see the literature review of research on R&D spillovers at the bottom of page 4 of this paper: it suggests that the social return from R&D is around 4 times greater than the private return, suggesting that there are large under-incentives for private firms to invest in the socially optimal level of R&D.

I think the other rationale for such an R&D effort is that placing a politically tractable price on emissions right now — through a carbon tax or cap-and-trade system — could likely produce emissions cuts of 10 or 20 percent. However, in the long run, if we want to make deep emissions cuts — 80 percent or more from current levels — this will happen only with either truly large, expensive, and probably infeasible emissions prices, or through some technological breakthroughs that transform how we produce and use energy in ways that are accessible and relatively inexpensive. I think Lomborg is correct to point out that it is far more likely that the increasingly important developing world will only substantially participate in emissions cuts in the latter scenario.

Here are ten more things I think I think, about the book and otherwise: