Assorted links

by on January 25, 2013 at 7:32 am in Uncategorized | Permalink

1 Jay January 25, 2013 at 7:45 am

1) When I have two non-stationary time series with a strong correlation/R^2/t-statistics/etc I immediately claim causation. F*ck Engle-Granger. Their work is bogus.

2 Nylund January 25, 2013 at 12:56 pm

While your snark is well-deserved, it pains me to see the name “Granger” used in the context of properly identification of causality. “Granger Causation” has to be the biggest misuse of the term “causation” in economics. It’s just correlation separated by time. It should really be called “Granger Correlation.”

3 Ricardo January 25, 2013 at 5:40 pm

Post hoc ergo propter hoc!

4 Andrew' January 25, 2013 at 7:52 am

The bug of basic research is that it is so easily copied, right? How’z’about we make it a feature?

5 Andrew' January 25, 2013 at 8:08 am

4. It’s ironic to be debating single-paper results on this topic. If I understand correctly, Ioannidis basically assumed p=0.05 (and positive result selection bias), the new paper looks at advertised p-values that range from p=0.05 to zero as a corrective to Ioannidis. Maybe we could change the arbitrary statistical conventions, or maybe we should not put much stock in individual results. Research is a mess. To me that’s a known issue.

6 jdm January 25, 2013 at 8:09 am

A unilateral carbon tax even if hypothetically imposed only in the US (countries like Australia and Ireland now have such a tax) could be beneficial for the US if done in conjunction with tax reform. With a modest but regularly increasing carbon tax, we could cut regressive payroll taxes, income taxes, and cut dividend and capital gains taxes. From what I understand, economists across the political spectrum (Frank to Mankiw) would support a move in this direction. It would simplify the tax code and promote growth. It would have a measurable impact on carbon emissions and do so in an optimal way (as opposed to the more likely but less efficient command and control alternative). Exporters could be given a carbon credit to offset the tax for exports to countries that do not have such a tax. Importers would get a carbon tariff. This would encourage other countries to follow suit and not penalize US manufacturers. A well designed carbon tax is win-win on multiple fronts.

7 mofo January 25, 2013 at 9:07 am

I agree wholeheartedly. I think the real question is why it doesnt have broad support already. Is economics just another issue designed to inflame each ‘side’s base while nothing changes? Does this idea just not have a strong enough champion?

8 Peter Schaeffer January 26, 2013 at 2:59 pm


Does anyone have any actual evidence that the welfare loss (diminished prosperity) from carbon taxes would actually be offset from the gains from lower Federal taxes? It seems like a rather unlikely outcome. The general consensus of all economists is that taxes should be broadly based. Carbon taxes are the opposite extreme.

The notion of offsetting carbon taxes with export subsidies and import tariffs is quote logical. It is also very difficult / impossible for two reasons. First, the practical problems of calculating the tariff / subsidy are rather hard. For example, how much carbon is their in a Blu-Ray player imported from China? Second, the rest of the world fight U.S. carbon subsides / tariffs very, very hard.

The ROW won’t have any problem with purely domestic carbon taxes. However, once we more to offset set them with subsidies / tariffs we will have a conflagration on our hands.

9 john personna January 25, 2013 at 2:30 pm

OK, but a carbon tax is an energy discourager, and creates a comparative (further) advantage for cheap energy countries.

10 Dick King January 25, 2013 at 7:50 pm

Any time I see an advocate of a carbon tax advocating that the funds be used for a longstanding liberal wet dream, I have to wonder whether the purpose of the tax in their mind is to reduce future climate change, or whether that’s simply a stick they can use to beat their opponents into submission. They never seem to advocate an across-the-board reduction of the income tax, cutting everyone’s income tax in half, for example.

The payroll taxes are not regressive. FICA feeds directly into the social security payments people get, with lower income people getting far more per dollar paid in then higher income people, and although the medicare money you pay in is proportional to income, the medicare benefits are the same for everyone no matter how much you pay in. .


11 jdm January 26, 2013 at 9:26 am

I’m in favor of reducing income tax rates across the board. I’m even more in favor of reducing capital gains taxes to spur savings and investment. But we also need to lower employment taxes. These taxes discourage hiring. They are an extra expense to the employer, an expense that can be avoided by automation and outsourcing. As a society, we are better off if more people are gainfully employed. Cutting taxes on employment and severing the pernicious link between employment and health care would reduce the cost of hiring and so would encourage more of it. A carbon tax could help pay for this in addition to being our best (only?) hope for keeping the planet habitable for human civilization.

12 TMC January 26, 2013 at 9:56 am

“being our best (only?) hope for keeping the planet habitable for human civilization.”

Been in a closet for the last 10 yrs? If you are really concerned, there is way too much info contradicting CAGW. Even the IPCC is in a delicate dancing act between the truth and their own survival.

13 jdm January 26, 2013 at 1:41 pm

The overwhelming majority of climate scientists and all national science academies in the world strongly disagree.

14 Peter Schaeffer January 26, 2013 at 3:05 pm


“A carbon tax could help pay for this in addition to being our best (only?) hope for keeping the planet habitable for human civilization.”

Unless you have plan to curb carbon emissions in China and India you need to come up with a better plan. China and India produce two times as much carbon as the USA.

Here is another perspective. If U.S. CO2 output went to zero tomorrow, that would only offset CO2 output growth by 6-7 years. Like I said, you need a better plan.

15 jdm January 26, 2013 at 3:20 pm

Peter Shaeffer,
I agree, a US carbon tax is not sufficient by itself to stabilize CO2.

That said, a) a carbon tax as I outlined above would be good for the US on other grounds, b) it would spur new low carbon energy technologies that could be exported elsewhere, and c) it would give us a leg to stand on when negotiating with the Chinese and Indians on carbon reductions. They’re unlikely to pay us much heed as long as our carbon emissions per capita are many times their own.

16 Peter Schaeffer January 26, 2013 at 4:02 pm


“a carbon tax as I outlined above would be good for the US on other grounds”

Aside from the (very hypothetical) benefits from reduced CO2 emissions, how can a carbon tax be a good thing? As stated above, economists (more or less) invariably favor broad based taxes, not taxes on specific goods. How does reducing efficiency (by forcing a suboptimal utilization of carbon fuels) help the U.S.? Carbon based fuels are not free. Indeed, they are heavily taxed. If consumers choose to pay for them, then the welfare (prosperity) gains must offset the economic costs.

“it would spur new low carbon energy technologies that could be exported elsewhere”

The global market for low carbon energy technologies already exists. U.S. producers can already export whatever goods and services they produce globally. In real life, the U.S. is a large net importer of “low carbon” energy technology (noting solar cells and windmills). Expanding U.S. demand will simply give foreign producers greater economies of scale, further entrenching U.S. import dependency. The U.S. could overcome this with massive tariffs on imported low carbon technology. However, that is explicitly impossible under current trading rules and contrary to the dominant “free” trade ideology of the United States (which I oppose).

“They’re unlikely to pay us much heed as long as our carbon emissions per capita are many times their own.”

Why would they pay attention to us in any case? Europe has been much aggressive in pursuing Green technology. Do they listen to Europe? Does either China or India even hint at caring about U.S. or European global warming policy? Both countries (and the rest of the developing world) have made it very clear that they are not willing to contemplate any restrictions on carbon for decades to come.

They are quite willing to let Europe and the U.S. reduce emissions. Indeed, they welcome such reductions. However, that is only to raise the ceiling on what they can emit.

“The delusions of the right is that America can rule the world, the delusion of the left is that America can save the world”

17 jdm January 26, 2013 at 4:47 pm

Here’s a very short list of prominent economists who have supported a carbon tax, including one of the bloggers who maintain this site.

A carbon tax is in some ways a consumption tax. Economists (as far as I can tell) almost universally favor consumption taxes over taxes on investment and income.

China and India share the same climate we do. They’re going to suffer along with us when the ice sheets collapse and their coastal cities flood and when their crops fail from drought and their forests burn. It’s in their interest to address the problem. If we impose a carbon tariff on their goods and give a carbon credit to our exporters, it will get their attention pretty quickly. You say it is difficult to work out the details. That’s true, it is. But there are lots of things in life that are difficult and people do them. My income taxes are difficult to calculate, but I still do it. So I don’t find the argument that it will be difficult to work things out exactly compelling. You don’t need to get things exactly right anyway, just approximately right.

18 Peter Schaeffer January 27, 2013 at 6:59 pm


General consumption taxes and taxes on specific goods are very different things. The former (supposedly) would reduce economic distortions. The latter will increase them.

“China and India share the same climate we do.”

Yes, the do. However, they completely disagree with the need to reduce CO2 emissions now. Of course, they want the U.S. to reduce CO2, but only so that the can emit more. Even if they tolerated U.S. carbon tariffs and carbon export subsidies, we would still be crippling the U.S. economy to enable China/India to burn more coal. How does that possibly make sense?

19 jdm January 28, 2013 at 10:05 am

Peter Schaeffer,

“General consumption taxes and taxes on specific goods are very different things. The former (supposedly) would reduce economic distortions. The latter will increase them.”

Economists regard a carbon tax as a Pigou tax – taxing a negative externality to properly account for it’s cost at a societal level. It is therefore not distortionary. The goal is to reduce carbon emissions and a properly designed tax/tariff/rebate would do so.

“Even if they tolerated U.S. carbon tariffs and carbon export subsidies, we would still be crippling the U.S. economy to enable China/India to burn more coal.”

I don’t get this part. If we reform the tax system, cutting corporate tax rates, taxes on capital and income and labor, and substitute a carbon tax to make up for the revenue why is that going to cripple the US economy? Based on what I have read, the opposite would happen, even if China and India didn’t go along. Look at the tax system in Singapore for example. High consumption taxes, low income and capital gains taxes.

20 Peter Schaeffer January 28, 2013 at 11:26 am


“Economists regard a carbon tax as a Pigou tax”

It’s only a Pigou tax if there is an externality than can be addressed via the tax. Remember, carbon emissions are a global issue, not a U.S. issue. If China/India (and the rest of the developing world) respond to declining U.S. emissions by expanding theirs, then the externality goes away. Since this is the stated intent of the countries in question, this is a dispositive point.

“I don’t get this part. If we reform the tax system, cutting corporate tax rates, taxes on capital and income and labor, and substitute a carbon tax to make up for the revenue why is that going to cripple the US economy?”

The level of carbon taxation needed to substantially (50-90%) reduce emissions is likely to be very high. A tax of that magnitude on one sector of the economy is the antithesis of a “broad-based consumption tax”. The efficiency losses will be commensurately large.

“Look at the tax system in Singapore for example. High consumption taxes, low income and capital gains taxes.”

Not true. The GST in Singapore is 7% (around the same level as the U.S.). What makes Singapore unique is extremely low total government spending (17% of GDP). The comparable number in the U.S. is 42%.

What Singapore really shows is the value of limited government in a highly developed economy. More precisely, the value of not having a massive welfare state.

21 anon January 25, 2013 at 8:42 am

6. A truly excellent resume.

First one is great. All the copies to follow, not so much.

22 Urstoff January 25, 2013 at 9:14 am

A resume that copies a website with awful design is not a good resume. Not to mention that it’s pretty unreadable in general.

23 Ashok Rao January 25, 2013 at 9:24 am

1) The United States should free its trade with various countries with climate concessions in return. India and China should be at the top of this list. Of course, this will be hugely unpopular among the industrial-class conservatives who are not only skeptical of climate change (or those who fly first class to Davos and then wax eloquent about, oh I don’t know, the melting ice caps) but are most vulnerable to freer movement of capital.

That said, this would be a good way to move towards not only a better world (open borders etc.) but also achieve lasting environmental justice.

On a more technical note, the trade agreements should enforce a long-term commitment to bringing emissions *and* emissions growth down and perhaps a similar commitment to invest in cleaner technologies.

24 Rahul January 25, 2013 at 9:33 am

You are implicitly assuming India is sold on free trade? Lots of constituents in India oppose free trade too.

25 ThomasH January 25, 2013 at 10:01 am

The benefits to the US from freer trade with India would be little dinimisned if India did not allow freer trade with the US. The other win-win incentive to be offered woud be freer immigration.

26 Peter Schaeffer January 26, 2013 at 2:22 pm

“The other win-win incentive to be offered woud be freer immigration.”

We have been over this 100 times already. However, low-skill immigration is an obvious loser for the United State. High-skill immigration is only a net plus if economic growth keeps up. That hasn’t happened in more than a decade. Without economic growth, even high-skill immigration is a direct detriment to the economy of the American people.

Of course, even with economic growth, high-skill immigration is a negative if congestion effects are large enough (clearly they are in New York, California, etc.). However, if we are really facing a resource constrained future (as in a carbon limits), then all immigration is a pure negative. If the lifeboat is full, you don’t invite foreigners to join.

27 Ashok Rao January 25, 2013 at 10:35 am

From the US-side, yes.

It’s tough for India to develop as a high-end manufacturer when there is a high tariff on any value-added. There are many in the business community here that are a little irritated (even if wrongly so) vis-a-vis American tariffs.

28 Ray Lopez January 25, 2013 at 12:43 pm

Excellent! You beat me to this post AR. I too have been saying this for a while now. Trade China’s right to be “Sweatshop to the World” in exchange for them agreeing, along with the USA, to a carbon tax. It will also make the American redneck, er, conservative voter, a fan of greenhouse gas reduction. Surprised the National Review writer did not mention this (nor has anybody in mainstream media). As for India? Their trade is too small to matter now but in time it will and they’ll come around, if China does.

29 Peter Schaeffer January 26, 2013 at 2:18 pm


We have already granted China the right to be “Sweatshop to the World”. When China joined the WTO (and received permanent MFN status) the U.S. eliminated all tariff barriers to China. Indeed, the U.S. has both de facto and de jure free trade with the entire world (save for Cuba, North Korea, etc.). Simple numbers. U.S. custom duties totaled $30.8 billion in 2012. Total imports were roughly $2.3 trillion. That’s an average tariff rate of 1.34%.

China is now burning around 3.8 billion tons of coal per year (4 times the U.S.). Do you really think China is going to materially reduce its coal consumption in return for something we have already given away?

Here is basic fact missed by almost all discussion of this topic (global warming). China and India now produced 2 times as much CO2 as the U.S. and account for most (by far) of the growth in CO2 output. We have no trade leverage with either (having given it away some time ago).

China and India both intend to drastically increase coal consumption of the next 10-30 years to provide a higher living standard for their people. The U.S. has nothing to offer (even hypothetically) that would induce them to materially change their plans.

30 Chip January 25, 2013 at 8:19 pm

“the melting ice caps”

Antarctic ice is at its largest extent since satellite records began in 1979 (while Arctic ice is near a record low).

If you don’t know such basic facts you really shouldn’t be proposing a massive restructuring of the economy.

It’s really perverse how so many people believe anthropogenic warming will lead to catastrophic climate events despite the lack of empirical evidence.

31 Peter Schaeffer January 26, 2013 at 2:09 pm


What a wonderful plan. America gives up its high standard of living derived from consumption of carbon based fuels and imports a couple of hundred million more poor people to drive down living standards even more.

I am sure that at least 99% of the American people would just love it.

How far-fetched can any idea actually be?

32 Jasper January 25, 2013 at 10:14 am

The entire goal is to make those Virtual Assistants evolve naturally, through random variations and imitation. However, this evolving could be a purely internal process.

I propose either Google Now or Siri start to work with an agents system.
Imagine that when you ask Siri a question, one of its different ‘agents’ answers. People never know which agent they are dealing with.
The agent would answer the question, e.g. “How do I know whether I should get a new toothbrush?”. Then, crucially, it would assess how successful it was (whether through implicit or explicit feedback). Based on its success rate in answering a particular (kind of) question, it would be assigned a score (again, for that particular question/group of questions).

Ideally these random variations in how it answers would happen completely autonomously.
However, why not first harness the power of human intelligence?
Make it open source. Anyone could upload an agent, somewhat like the app system.
Intelligently spread out over such an enormous used base, those new agents could easily build up a score without bothering any single person. However, if an agent does well, more and more questions get sent its way. Inside Siri there would be an continuous Darwinian struggle, unbeknownst to the user.

33 Mike January 25, 2013 at 4:20 pm

#6 … I did the same thing when i got out of school in ’94. I included a link to it in all of my printed resumes (~100). It didn’t get a single hit; things have changed.

34 Floccina January 26, 2013 at 9:59 pm

#1 what everyone seems to ignore is that it will probably be much cheaper to remove co2 from the air than to mitigate. Biochar, Enhanced weathering and deep ocean iron fertilization to mention a few methods.

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