Paul Krugman on a carbon tax

by on April 21, 2016 at 12:52 am in Economics, Law, Science | Permalink

If reducing emissions really has to involve moving on many fronts, anything that looks like an administrative solution — telling, say, power companies what to do or not to do — is going to be much more costly than carbon pricing that exploits all the possibilities. But if a large part of the solution is going to involve a fairly limited set of measures — such as putting a quick end to the practice of burning coal to generate electricity — getting to broad-based carbon pricing is much less central.

And what I gather from reading various analyses of our prospects is that we’re closer to case #2 than to case #1: the problem of limiting climate change isn’t all that complex. End coal-burning and you’ve gone a significant way; a few other big things get you another substantial part of the way. Yes, comprehensive carbon pricing would be best, but it’s not the sine qua non of effective action.

Most of his points concern the status of Econ 101.

Addendum: Ashok Rao comments.

Last week, the U.S. Department of Agriculture (USDA) confirmed that it will not regulate the cultivation and sale of a white-button mushroom created using CRISPR

In this case, no foreign organism’s genetic material was introduced into the food, and that makes all the difference. If Yang had tackled mushroom browning by adding bits of genetic code from another organism, it would have been subject to USDA scrutiny as other non-browning produce has been. Until recently, genetic modification required the insertion of foreign viruses or bacteria, but CRISPR is more advanced than that. Because of that loophole, it’s not under the USDA’s jurisdiction. The EPA only regulates GMOs designed for pest control, and the FDA considers all GMOs to be safe. That leaves this non-browning mushroom cleared for take-off.

Scientists are excited. Anti-GMO advocates are disturbed. The public will probably continue to be more confused than anything else.

Here is the Rachel Feltman piece.  For the pointer I thank Cleveland Cavaliers fan Philip Wallach.

There is a new paper by Kristin L. Leimgruber, Alexandra G. Rosati, and Laurie R. Santos, here is the abstract:

Punishment of non-cooperators is important for the maintenance of large-scale cooperation in humans, but relatively little is known about the relationship between punishment and cooperation across phylogeny. The current study examined second-party punishment behavior in a nonhuman primate species known for its cooperative tendencies—the brown capuchin monkey (Cebus apella). We found that capuchins consistently punished a conspecific partner who gained possession of a food resource, regardless of whether the unequal distribution of this resource was intentional on the part of the partner. A non-social comparison confirmed that punishment behavior was not due to frustration, nor did punishment stem from increased emotional arousal. Instead, punishment behavior in capuchins appears to be decidedly social in nature, as monkeys only pursued punitive actions when such actions directly decreased the welfare of a recently endowed conspecific. This pattern of results is consistent with two features central to human cooperation: spite and inequity aversion, suggesting that the evolutionary origins of some human-like punitive tendencies may extend even deeper than previously thought.

For the pointer I thank the excellent Kevin Lewis.

I am not predicting this scenario, but it is useful to think through which paths might restore the growth gains to the American middle class.  From my column in The Upshot, here is the section on China:

Much of the competition for American manufacturing has come from China, and recent research has shown that China’s economic impact in the United States has been bigger than many economists initially thought, and in some ways, it has been more painful. China’s manufacturing has held down American middle-class wages, while soaring Chinese demand for commodities has pushed up resource prices. Of course, cheap Chinese imports have made American paychecks go further, but that is no consolation for people who have lost their jobs or suffered lower wages as a consequence.

Better times may be ahead, though. Higher wages in China — and other emerging nations — are now limiting the competitive advantage of those economies. And perhaps more important for Americans, as China reaches technological maturity, it is likely to shower innovations on consumers, creating a net gain for people in the United States.

China is already the major producer of solar panels and electric cars, for example. It is likely to contribute important innovations in consumer drones and driverless cars and in many other fields: The Chinese government is pouring immense resources into biotechnology, including new gene editing techniques. When it comes to mobile apps, messaging and electronic payments, China is arguably ahead of America. Imagine a future in which Chinese innovations benefit Americans just as the United States benefited Europe and vice versa.

This would mean more competition from China, of course, and lost jobs in some fields, but to simply focus on the negatives would be shortsighted. The reality is that innovators do not capture all or even most of the benefits they bring to the world. Once an idea emerges, its benefits begin to expand, and those benefits will surely spread to the United States.

I believe China will become much more innovative even if Chinese growth goes through continuing turmoil; keep in mind the United States was remarkably innovative in the 1930s throughout the Great Depression.

The column also considers skill-based technical change, and how it might turn more toward less skilled workers, and also…religion and Mormons.

…one piece of the agency has found a potentially powerful new tool to flatten the spikes and cut the number of proposals: It can simply eliminate deadlines.

This week, at an NSF geosciences advisory committee meeting, Assistant Director for Geosciences Roger Wakimoto revealed the preliminary results from a pilot program that got rid of grant proposal deadlines in favor of an anytime submission. The numbers were staggering. Across four grant programs, proposals dropped by 59% after deadlines were eliminated.

Here is the story, via the excellent Otis Reid.

Singapore, 5 May 2015 – The Graciousness Index has continued to move up, from 53 in 2013 to 55 in 2014, and to 61 in 2015. This year’s rise is led by a growing sense of positive perceptions about kindness and graciousness in Singapore, with respondents rating both themselves and others higher when it comes to being considerate, courteous and showing appreciation.

The Graciousness Index is an annual study commissioned by the Singapore Kindness Movement to track experience and perceptions of kindness and graciousness in Singapore, as well as study attitudes towards various pertinent community issues. Over a six-week period from December 2014 to February 2015, a demographically representative sample of 1,850 respondents was asked to share their experiences and perceptions of graciousness in Singapore.

There was a marked increase in optimism, with 44% of respondents indicating that graciousness in Singapore had improved, compared to just 28% last year. 84% rated their own gracious behaviour as either good or excellent, and 69% felt the same about overall Singapore society. They also felt that Singapore was improving across the graciousness pillars of being considerate, being courteous and showing appreciation to others.

Dr. William Wan, General Secretary of the Singapore Kindness Movement, believes that this is a promising sign. “The increase in positive perceptions and overall sense of improvement is encouraging. If we as a nation continue this positive trend, then kindness and graciousness can become part of our norms and national identity.”

That which cannot be measured…

Here is the link, via James Crabtree.

Here is the NYT article:

Can you fly an iPhone to the stars?

In an attempt to leapfrog the planets and vault into the interstellar age, a bevy of scientists and other luminaries from Silicon Valley and beyond, led by Yuri Milner, the Russian philanthropist and Internet entrepreneur, announced a plan on Tuesday to send a fleet of robots no bigger than iPhones to Alpha Centauri, the nearest star system, 4.37 light-years away.

If it all worked out — a cosmically big “if” that would occur decades and perhaps $10 billion from now — a rocket would deliver a “mother ship” carrying a thousand or so small probes to space. Once in orbit, the probes would unfold thin sails and then, propelled by powerful laser beams from Earth, set off one by one like a flock of migrating butterflies across the universe.

Within two minutes, the probes would be more than 600,000 miles from home — as far as the lasers can maintain a tight beam — and moving at a fifth of the speed of light. But it would still take 20 years for them to get to Alpha Centauri. Those that survived would zip past the stars, making measurements and beaming pictures back to Earth.

Upon reflection, I don’t think we should do it.  What if the devices are traced back to us and we are exterminated or enslaved or simply demoralized?  Let’s stick with those moons of Saturn.

Here is how I think about these issues. The Artificial in AI can sometimes mislead so let’s start by getting rid of the A and asking instead whether more NI, Natural Intelligence, will decimate the middle class. For example, will increasing education in China decimate the American middle class? I don’t think so.

As I said in my TED talk, the brainpower of China and India in the 20th century was essentially “offline”. Instead of contributing to the world technological frontier the people of China and India were just barely feeding themselves. China and India are now coming online and I see the increase in natural intelligence as one of the most hopeful facts for the future. It’s been estimated that a reduction in cancer mortality of just 10 percent would be worth $5 trillion to U.S. citizens (and even more taking into account the rest of the world). A reduction in cancer mortality is more likely to happen with a well-educated China than with a poorly educated China. So we have a huge amount to gain by greater NI.

In the case of low-skill labor the rise of China has hurt some US low-skill workers (although US workers as a whole are almost certainly better off due to lower prices). The US has historically had an abundance of highly-skilled labor and with greater education around the world we have less of a competitive advantage. In the case of high-skill labor, however, I think the opportunities for gains are much greater than with competition for low-skill labor. Ideas are what drives growth and ideas are non-rivalrous, they quickly spread around the world. The more idea creators the better for everyone. At the world level, for example, the standard of living and the growth rate of world GDP have both gotten larger as population has increased.

Greater foreign intelligence and wealth could be a threat if intelligence turns from production to destruction (this is also a potential problem with AI). We probably can’t keep China poor, even if we tried, and any attempt to try to do so would likely backfire in the worst possible way. Thus, if we want to keep high-skill Chinese workers working on medical rather than military breakthroughs, we must preserve a peaceful world of trade. Indeed, peace and trade become ever more important the richer the world gets.

Now let’s turn from NI to AI. For the foreseeable future I see AI as being very similar to additional NI. Smart people in China aren’t perfect substitutes for smart people in the United States and there are also plenty of opportunities for complementarity. Similarly AI is not a perfect substitute for NI and there are plenty of opportunities for complementarity. An AI that drives your car, for example, complements your NI because it leaves more time for more productive tasks.

(What happens when AI does become a perfect substitute for NI? We could easily be 100 years or more from that scenario but my foresighted colleague, Robin Hanson, has a new book The Age of Em that discusses the implications of uploads, human intelligence copied into software—Hanson’s book is the most complete and serious scenario analysis of the implications of a new technology ever written but most of us won’t live long enough to know whether he is right although Robin might.)

Thus, the analysis of AI and NI is similar except for one important fact. As Chinese workers become better educated a significant share of the gains will go to Chinese workers (although by no means all).  AI, however, is produced by capital. But in our world capital isn’t scarce. The world is awash in capital and computing power is getting ever-cheaper. AI isn’t like an oil field owned by a handful of people. AI will be cheap and ownership will be widespread. Just look at your cellphone—it’s faster and more powerful than a multi-million dollar Cray-2 supercomputer of 1990. Moreover, in 1990 there were only a handful of Cray-2s and today there are billions of cell-phone super-computers including hundreds of millions and soon billions in poor countries. The gains from AI, therefore, will flow not to capital but to consumers. So if anything the gains from more AI are even larger than the gains from more NI.

From my answer on Quora.

There is a new NBER paper on this topic, by Victoria Y. Fan, Dean T. Jamison, and Lawrence H. Summers, here is the abstract:

Estimates of the long-term annual cost of global warming lie in the range of 0.2-2% of global income. This high cost has generated widespread political concern and commitment as manifested in the Paris agreements of December, 2015. Analyses in this paper suggest that the expected annual cost of pandemic influenza falls in the same range as does that of climate change although toward the low end. In any given year a small likelihood exists that the world will again suffer a very severe flu pandemic akin to the one of 1918. Even a moderately severe pandemic, of which at least 6 have occurred since 1700, could lead to 2 million or more excess deaths. World Bank and other work has assessed the probable income loss from a severe pandemic at 4-5% of global GNI. The economics literature points to a very high intrinsic value of mortality risk, a value that GNI fails to capture. In this paper we use findings from that literature to generate an estimate of pandemic cost that is inclusive of both income loss and the cost of elevated mortality. We present results on an expected annual basis using reasonable (although highly uncertain) estimates of the annual probabilities of pandemics in two bands of severity. We find:

1. Expected pandemic deaths exceed 700,000 per year worldwide with an associated annual mortality cost of estimated at $490 billion. We use published figures to estimate expected income loss at $80 billion per year and hence the inclusive cost to be $570 billion per year or 0.7% of global income (range: 0.4-1.0%).

2. For moderately severe pandemics about 40% of inclusive cost results from income loss. For severe pandemics this fraction declines to 12%: the intrinsic cost of elevated mortality becomes completely dominant.

3. The estimates of mortality cost as a % of GNI range from around 1.6% in lower-middle income countries down to 0.3% in high-income countries, mostly as a result of much higher pandemic death rates in lower-income environments.

4. The distribution of pandemic severity has an exceptionally fat tail: about 95% of the expected cost results from pandemics that would be expected to kill over 7 million people worldwide.

In other words, in expected value terms an influenza pandemic is a big problem indeed.  But since, unlike global warming, it does not fit conveniently into the usual social status battles which define our politics, it receives far less attention.

I remember a very interesting debate that my father was involved in, where there was a water beetle that can’t travel very far and can’t fly. You have these in the north coast of Australia, and in millions of years, they haven’t been able to travel from one stream to another. And it came up that in the north coast of New Guinea, you have the same water beetle, with slight variations. The only way that could have happened was if New Guinea came off Australia and turned around, that the north coast of New Guinea used to be attached to the coast of Australia. It was very interesting seeing the reaction of the geologists to this argument, which was that ‘beetles can’t move continents.’ They refused to look at the evidence.

That is Geoffrey Hinton, being interviewed by Adrian Lee, mostly about AI and Go, interesting throughout.

For the pointer I thank Michelle Dawson.

Dousing every meal in salt might make food tastier, but all that extra sodium is eventually going to raise your blood pressure—giving you bigger problems than bland food. So researchers in Japan have built a prototype electric fork that uses electrical stimulation to simulate the taste of salt.

Designed and engineered using the research on electric flavoring at the University of Tokyo’s Rekimoto Lab, the battery-powered fork features a conductive handle that completes a circuit when the tines make contact with a diner’s tongue, electrically stimulating their taste buds.

The prototype fork, which was built from just $18 worth of electronics, creates the sensation of both salty and sour, and has adjustable levels of stimulation, given that everyone has unique taste buds. When pushed too far, though, the fork can produce an unpleasant metallic taste in the mouth. So if it’s ever commercialized, there will need to be an initial calibration procedure to ensure a pleasant and tasty dining experience, without going so far as to cause physical discomfort.

Take that, gdp deflator!

Here is the article, and for the pointer I thank Peter.

The paper title is Believing there is no free will corrupts intuitive cooperation, and the authors are John Protzko, Brett Ouimette, and Jonathan Schooler.  The abstract is this:

Regardless of whether free will exists, believing that it does affects one’s behavior. When an individual’s belief in free will is challenged, one can become more likely to act in an uncooperative manner. The mechanism behind the relationship between one’s belief in free will and behavior is still debated. The current study uses an economic contribution game under varying time constraints to elucidate whether reducing belief in free will allows one to justify negative behavior or if the effects occur at a more intuitive level of processing. Here we show that although people are intuitively cooperative, challenging their belief in free will corrupts this behavior, leading to impulsive selfishness. If given time to think, however, people are able to override the initial inclination toward self-interest induced by discouraging a belief in free will.

I would say that we need a large swathe of society to believe in ideals of free will and individual responsibility, even though such concepts are not entirely faultless from a metaphysical point of view.  For a given thinker, it is worth asking whether he or she adds to or takes away from that social belief.  For some writers, the concepts of individual blame and responsibility apply only to their intellectual adversaries!

For the pointer I thank Ben Southwood.

This one is transcript and podcast only, no video, and we will be doing some more in that format.  Jonathan was in top form, here are a few bits:

COWEN: If we get to a very fundamental question — left‑wing individuals and right‑wing individuals, and let’s take, for now, only America. As people, in other ways, how different do you think they are?

Or, is it just there are these semi‑accidental triggers which have set off certain modules in the left‑wingers and different modules in the right‑wingers, but otherwise they’re going to dress the same, they’re going to treat their spouses the same way, or not? Are they fundamentally different?

HAIDT: Not fundamentally different, but different in predispositions. The most important finding in psychology in the last 50 to 100 years, I would say, is the finding that everything you can measure is heritable. The heritability coefficients vary between 0.3 and 0.6, or 30 to 60 percent of the variance, under some assumptions, can be explained by the genes. It’s the largest piece of variance we can explain.

If you and I were twins separated at birth and raised in different families, our families would pick which religions we were raised in and they would pick how often we go to church or synagogue, but once we’re out on our own, we’re going to both converge on our brain’s natural level of religiosity.

Same with politics, whether you’re on the right or left is not determined by your genes, but you’re predisposed.


COWEN: If you’re in a swing state in, say, proverbial southern Ohio and in a natural setting you meet a person. With what probability do you think you can guess or forecast if they’re left‑wing or right‑wing? Even-up would be 0.5.

HAIDT: Probably 0.58, 0.57. People are incredibly variable.


COWEN: Would it be a partial test of your theory if we looked at a lot of different cultures and asked, “Who are the people who dress neatly and who have a lot of calendars and stamps?” to measure whether those were typically the conservatives?

HAIDT: Yes, that would be a test.


COWEN: For gay individuals, maybe not all minorities, but many minorities this is very much a positive thing. If morality is fundamentally so nonrational or arational in some key ways, is it not the case we’re always either undershooting or overshooting the target, that we can never hit it just right?

Maybe for America to be more tolerant, you need the norms to be quite crude and blunt, and overstated, and we get this political correctness. Yes it’s bad, but maybe it’s less bad then when we used to undershoot the target?

Jonathan had a good answer but it is too long to excerpt.

COWEN: Let’s say you’re Brown or Yale, and students set up a lacrosse team, and they call it the Brown Redskins, and they do some rituals which offend some people. No matter what the intent would be, should Brown or Yale step in and say, “You can’t do that?”

HAIDT: There’s a big, big line between saying, “Brown or Yale should step in and tell people what they can’t — .” In general I think no, in general the idea — .

COWEN: No they shouldn’t step in?

HAIDT: They should not step in. We should be extremely limited when we say that authorities can step in and change things. The very fact of doing that encourages microaggression culture, encourages students to orient themselves towards appealing to these authorities. The point of the microaggression article is young people these days have become moral dependents.


COWEN: Let me try another analogy on you. You mentioned the army, but take private corporations, and Brown and Yale are in a sense private corporations. Harvard was originally. I wouldn’t call them restrictions on free speech, I think that’s the wrong phrase, but if one’s going to use the phrase that way, there are numerous restrictions on free speech within companies, at the work place.

If you went to the water cooler and said a number of offensive things, you would be asked to stop and eventually fired, and I don’t see anything wrong with that. So if we think of Brown, Yale, or Harvard as like a normal company, isn’t there still even with all the nonsense, a lot more free speech on campus than in actual companies?

HAIDT: Yes, and there should be. Again, a company is organized to be effective in the world. Just like the army where their priority is unit cohesion, in a company your goal isn’t to encourage everyone to express their values and criticize each other, your goal is to get them to work together.

There is much much more, including on LSD, Sigmund Freud (overrated or underrated), Cecil Rhodes, how Jonathan would change undergraduate admissions, whether behavioral economics is realizing its full potential, Adam Smith, antiparsimonialism, the replication crisis in psychology, and whether Jonathan enjoys eating insects.

Disorientation is always stressful, and before modern civilization, it was often a death sentence. Sometimes it still is. But recent studies have shown that people who use GPS, when given a pen and paper, draw less-precise maps of the areas they travel through and remember fewer details about the landmarks they pass; paradoxically, this seems to be because they make fewer mistakes getting to where they’re going. Being lost — assuming, of course, that you are eventually found — has one obvious benefit: the chance to learn about the wider world and reframe your perspective. From that standpoint, the greatest threat posed by GPS might be that we never do not know exactly where we are.

That is from a long and very interesting Kim Tingley NYT piece on the former navigation secrets of the Marshall Islanders.  Here is one bit on how it works:

The Marshalls provide a crucible for navigation: 70 square miles of land, total, comprising five islands and 29 atolls, rings of coral islets that grew up around the rims of underwater volcanoes millions of years ago and now encircle gentle lagoons. These green dots and doughnuts make up two parallel north-south chains, separated from their nearest neighbors by a hundred miles on average. Swells generated by distant storms near Alaska, Antarctica, California and Indonesia travel thousands of miles to these low-lying spits of sand. When they hit, part of their energy is reflected back out to sea in arcs, like sound waves emanating from a speaker; another part curls around the atoll or island and creates a confused chop in its lee. Wave-piloting is the art of reading — by feel and by sight — these and other patterns. Detecting the minute differences in what, to an untutored eye, looks no more meaningful than a washing-machine cycle allows a ri-meto, a person of the sea in Marshallese, to determine where the nearest solid ground is — and how far off it lies — long before it is visible.


The Summer Institute on Field Experiments (SIFE) is a highly selective and innovative program at the University of Chicago that brings together the brightest young economists in the world and companies interested in using rigorous field experiment methods and behavioral economics to revolutionize the way they do business. The Institute seeks organization partners who are willing to be “matched” to the most promising of the Institute’s participants to work together and design solutions to problems they face. Organization partners will share their business challenges, and the Institute’s academics help them to scientifically test new ideas and solutions.

Run by John List, here is full information.