Results for “water” 1034 found
The market for property insurance vs. climate change
That is the topic of my latest Bloomberg column, here is one bit:
One of the classic rejoinders to worries about climate change is the claim that people can move out of highly vulnerable areas into safer areas. Maybe the world will not be willing to accept hundreds of millions of climate-change refugees, but within the US, perhaps people can move from storm-prone Florida to the northern Midwest, or to wherever might prove appropriate, including safer parts of Florida. The US, after all, has a longstanding tradition of individual mobility. And many parts of the country have the space and infrastructure for additional residents.
For such migration to have any effect on the costs of climate change, however, price signals have to be active and relatively undistorted. That is, some set of market prices has to be giving people impetus to leave one place for another. And policymakers have not been letting insurance markets perform their proper work in this regard.
And on the details:
Currently the market for Florida property insurance is in a pretty bad way. This year six relevant insurance companies went insolvent, and for Florida underwriting losses have run more than $1 billion for each of the last two years. Not surprisingly, insurers have been cutting back their coverage in the state or leaving altogether. The end result is that homeowners are finding it much harder to get coverage and finding it much more expensive when they do. None of this should come as a surprise, given the immense damage wrought by Hurricane Ian and previous storms.
Yet politics is stifling market adjustments. Florida has a state-run insurer of last resort, called Citizens Property Insurance Corp. Not surprisingly, that insurer has financial problems of its own, and in May Governor Ron DeSantis oversaw an additional $2 billion in reinsurance support for the company’s efforts. In other words, the state government is stifling the market signals that might induce some of the state’s homeowners to leave for drier pastures.
But don’t put your hopes in the Florida gubernatorial election. DeSantis’s Democratic rival, Charlie Crist, has criticized the governor for not doing more on the property insurance front and has proposed 90-day emergency insurance coverage for residents. That would stifle market incentives all the more.
I should note that water subsidies for the Southwest are another example of the same general phenomenon.
Tuesday assorted links
2. German wives listen more to German husbands than vice versa.
4. Haiti is truly collapsing. Yet few people wish to talk about what happens when a nation-state is no longer a viable nation-state.
5. What is going wrong in Principles classes?
6. Part of why I think AGI will prove difficult, namely that human use their whole body to compute.
8. Good review of Vesper, a good movie on the big screen.
Why energy price policy is hard
That is the topic of my latest Bloomberg column. The core problem is that if you let prices go up “too much” (i.e., to where they ought to be), many people will stop paying their bills. We don’t in fact have the political economy in place to enforce the wealth transfer to the public utility:
You might think, as I do, that utilities should take a relatively tough stance on delinquents. Still, the realities of politics can intervene. By one estimate, Truss’s plan would lead to average energy bills of £2,500, compared to £3,548 with no plan.
That is quite a difference, and many people might have trouble paying the higher amount. They might be able to pay more, but at what cost? Fewer pub visits? No satellite TV? Would people in fact choose such austerity? Customers know that if enough of them do not pay their bills, it would be very difficult to cut off service to such a large part of the electorate, especially with winter approaching.
By way of comparison, consider the current water crisis in Jackson, Mississippi. The town’s water utility is undercapitalized, and almost one-third of customers are behind on their bills . About one-sixth of customers are not even receiving bills. Yet it would be politically unfeasible for Jackson’s elected officials to cut off all those users, regardless of whether it would ultimately be more humane.
The fact is, it’s not always possible to increase prices. Especially if you are unable to collect any payment at all from many customers.
The problem is worse yet. Once customers are in the habit of not paying their utility bills, it gets harder to collect payment, even if future prices are much lower. Customers might expect the no-payment-necessary regime to continue, and to organize with that goal in mind. This is a common problem in lesser developed nations.
I do not favor the extensive UK energy subsidies, which unduly distort relative price signals, but they have to be understood in this context. Their net cost, relative to the alternatives actually on the table, is not nearly as large as it looks.
Newfoundland notes, St. John’s and environs
“Canada’s youngest province and Britain’s oldest colony” is what some of them say.
About 60 percent of St. John’s is Irish in background, and most people in the city above age 45 have a noticeable Irish accent, albeit with some Canadianisms thrown in. Those accents are close to those of Waterford, Ireland, and many Irish from the southeast of the country came over in the 1790-1820 period. The younger residents of St. John’s sound like other Canadians.
If you walk into the various pubs and houses of music, of which there are quite a few, you are most likely to hear offshoot forms of acoustic Celtic folk music.
The scenery of St. John’s reminds me of the suburbs of Wellington, New Zealand. On top of that, many of the homes are Victorian, as in the Wellington area. In St. John’s the row homes are called “jellybeans” because of their bright colors. They are in a uniform style because of a major fire in the city in 1892. A jellybean house near center city now runs between 300k-400k Canadian, the result of a big price hike once some offshore oil was discovered. The city is hilly and the major churches are Anglican, even though the Irish migrants were almost entirely Catholics.
Indians and Filipinos are playing some role in revitalizing the city. Not long ago about one thousand Ukrainians arrived.
In the Sheraton hotel the old mailbox is still “Royal Mail Newfoundland” and not “Royal Mail Canada.” Newfoundland of course was a dominion country of its own from 1907-1934, and a legally odd part of Britain 1934-1949, when it joined Canada through a 52% referendum result. In 1890 a NAFTA-like trade agreement was negotiated with the United States, but Canada worked Great Britain to nix the whole thing. A later agreement in 1902 was in essence vetoed by New England. Newfoundland had earlier rejected confederation with Canada in 1860.
Newfoundland ran up major debts in WWI, and tried to relieve them by selling Labrador to Canada. Canada refused.
Apart from the major museum (“The Rooms”), there are few signs of the indigenous.
Marconi received the first transatlantic wireless message on Signal Hill on December 12, 1901. In the 1950s, Gander was the world’s busiest international airport, because of all the planes that could not cross the Atlantic directly.
As you might expect to find in a small country, but not in a small province, you regularly meet people who seem too smart or too attractive for their current jobs. Many head to Calgary, but a lot of them don’t want to leave.
It has the warmest winter of any Canadian province.
Terre is the place to eat. The scallops are excellent everywhere. Fish and chips are a specialty too.
I would not say it is radically exciting here, but overall I would be long St. John’s. If nothing else, it makes for an excellent three-day weekend or nature-oriented week-long trip, and I hardly know any Americans who have tried that.
The Price of Power and the Power of Prices
As Europe’s energy crisis intensifies we are seeing calls for price caps, rationing, and command and control.
What’s happening: A range of government-imposed restrictions, akin to the kind of restraints during wartime, here is a sampling.
In Germany:
- Cologne’s magnificent cathedral — normally lit throughout the night — now goes dark over night. Public buildings, museums and other landmarks — such as the Brandenburg Gate in Berlin — will no longer be illuminated overnight either.
- In Hanover last month, hot water was cut off at public buildings, as the city seeks to cut consumption by 15%.
- The southern city of Augsburg decided to turn off traffic lights.
Spain:
- Congress agreed to temperature limitations — air conditioning no cooler than 27 degrees Celsius, or nearly 81 degrees Fahrenheit.
- After 10 p.m. shop windows and unoccupied public buildings won’t be lit.
Italy:
- Air conditioning in schools and public buildings has already been limited in what the government labeled “Operation Thermostat,” starting in May.
France:
- Shopkeepers will now be fined for keeping doors open and air conditioning running, a common practice.
- Illuminated signs will be banned between 1 a.m. and 6 a.m.
The Economist, however, reminds us of the power of prices. Namely, price caps can backfire but price increases can be combined with cash transfers can protect vulnerable consumers while maintaining strong incentives to reduce consumption and find substitutes:
How households respond to enormous price shocks has rarely been studied, owing to a lack of real-world data. One exception is that produced by Ukraine, which Anna Alberini of the University of Maryland and co-authors have studied, looking at price rises in 2015 after subsidies were cut. They found that among households that did not invest in better heating or insulation a doubling of prices led to a 16% decline in consumption.
Policies to help households cope with high prices have also been studied—and the results are bad news for politicians capping prices. In California, where a government programme cut the marginal price of gas for poor households by 20%, households raised their consumption by 8.5% over the next year to 18 months. Ukraine has found a better way to help. Households struggling to pay their bills can apply for a cash transfer. Since such a transfer is unrelated to consumption, it preserves the incentive for shorter showers, and thus does not blunt the effect of high prices on gas use. Another option is a halfway house between a price cap and a transfer. An Austrian state recently introduced a discount on the first 80% of a typical household’s consumption, which means people retain an incentive to cut back on anything over that.
…Households are not the only consumers of gas. Early in the war, manufacturers and agricultural producers argued against doing anything that might risk supplies, since production processes took time to alter and output losses could cascade through the economy. But initial evidence from the German dairy and fertiliser industries suggests that even heavy users respond to higher prices. Farmers have switched from gas to oil heating; ammonia, fertiliser’s gas-intensive ingredient, is now imported instead of being made locally.
Over time, households and industry will adapt more to higher prices, meaning that with every passing month demand for gas will fall.
The power of prices reminds us that carbon taxes can be effective at surprising low cost if we give them a chance to operate.
Wednesday assorted links
1. Why liberalism needs religion.
2. There is more in the Chips and Science Act than you might think.
3. Yana on Mises on socialism.
4. How to reduce the impact of fossil fuels on electricity prices.
5. Podcast with Deirdre McCloskey on being trans.
7. Single payer advocates can’t bring themselves to admit that the NHS essentially has collapsed.
Sunday assorted links
1. Good conversations have lots of doorknobs.
2. Scenario planning for a Taiwan invasion and defense.
3. Sociologist of religion Rodney Stark has passed away.
4. Cooling technologies Pakistani markets in everything.
5. Medieval medicine under the spotlight.
6. “The Latest Innovation in Beer Is Water in a Can” (WSJ).
What should I ask Katherine Rundell?
She is the author of the splendid new book on John Donne, reviewed by me here. More generally, here is from Wikipedia:
Katherine Rundell (born 1987) is an English author and academic. She is the author of Rooftoppers, which in 2015 won both the overall Waterstones Children’s Book Prize and the Blue Peter Book Award for Best Story, and was short-listed for the Carnegie Medal. She is a Fellow of All Souls College, Oxford and has appeared as an expert guest on BBC Radio 4 programmes including Start the Week, Poetry Please, and Seriously….and Private Passions.
Rundell’s other books include The Girl Savage (2011), released in 2014 in a slightly revised form as Cartwheeling in Thunderstorms in the United States where it was the winner of the 2015 Boston Globe–Horn Book Award for fiction, The Wolf Wilder (2015), and The Explorer (2017), winner of the children’s book prize at the 2017 Costa Book Awards.
And this:
…all her books, and her play, contain a joke at Belgium’s expense…
She is also an avid roofwalker, and more. Here is Katherine eating a tarantula.
So what should I ask her?
Friday assorted links
1. The dissolution of the monasteries.
2. “By my count, at least 29 of the 605 NBA players who saw the court last season had fathers who played in the league—almost 5 percent, a ludicrously high figure, and enough to fill two teams’ rosters.” About Bronny.
3. Trends for U.S. water infrastructure.
4. “Considering that it predates the Bank of Ireland and the State itself, it could even be said that Guinness is the longest-running successful large institution in Ireland.” Link here.
6. Bryan Caplan does stand-up comedy at the Comedy Cellar.
7. Is Google making the internet more boring? An interesting piece.
There is No Such Thing as Development Economics
I used to think there was such a thing as development economics. There are still richer and poorer countries, of course, but is there a “development economics,” a special type of economics for poor countries? I don’t think so. Maybe there once was. In the twentieth century, divergence in per-capita GDP increased big time and it was a burning question why poor countries weren’t on the same development path as the developed nations. Starting around 1990-2000, however, we have seen convergence. Most countries are now on the same path. Poorer countries and richer countries are becoming more alike, sometimes for good and sometimes for bad. I tweeted the following news headline recently:
Notice the commentary on NYC infrastructure but also the man bites dog angle. In Pakistan people on social media are apparently sharing videos of flooding in the New York subway to complain about the poor state of infrastructure in Pakistan!
My own anecdote fit the pattern. This week I am in Delhi and due to a series of unfortunate supply chain shocks at my house-build in the US, for the first time in 3 weeks I have running hot water and reliable internet access! Not only that but although India has sadly fallen for the paper straw nonsense the top hotels remain free from flow constrictors so the water gushes out of the shower with elan just as God intended. Civilization is truly moving back east.
More generally, poorer and richer countries face many of the same problems today: infrastructure, low-skill workers and technological change, climate adaption and so forth. Is the latest paper on cash transfers, pollution, or corruption about a poor country or a rich country? It’s hard to tell. Poor countries still have their own unique problems, of course, but those problems are best analyzed by country rather than by income category. India is not the same as Thailand or Peru. I see little that unites poor countries under the rubric development economics.
Saturday assorted links
1. More on the rise and fall of mobile home manufacturing.
3. “Sun-drenched Texas — not exactly known for its bleeding-heart liberals — has nearly triple the solar capacity this summer than it had last summer.” Link here.
4. Billionaire wealth as a percentage of gdp, across countries.
Thursday assorted links
What I’ve been reading
1. Ian Morris, Geography is Destiny: Britain and the World: A 10,000 Year History. None of the book is bad, and half is quite interesting. Think of the treatment as “Deep Roots for Brexit,” though willing to noodle over earlier and more interesting topics in history. From a good FT review by Chris Allnutt: “Morris succeeds in condensing 10,000 years into a persuasive and highly readable volume, even if there are moments that risk a descent into what he seeks to avoid: “a catalogue of men with strange names killing each other”, as historian Alex Woolf put it.” Now if only he would explain why their hot and cold water taps don’t run together…
2. Michel Houellebecq, Interventions 2020. Grumpy non-fiction essays, with plenty of naive anti-consumerism. You need to read them if you are a fan, but I didn’t find so much here of interest. I was struck by his nomination of Paul McCartney (!) as the most essential musician, with Schubert next in line. Mostly it is MH being contrary. He has earned the right, but he wasn’t able to make me care more.
3. Frank O’Connor, “Guests of the Nation.” One of the best short stories I have read, Irish. Can’t say any more without spoilers! 11 pp. at the link.
4. Ursula K. Le Guin, The Word for World is Forest. Has anyone done a systematic accounting of which Vietnam era fictional works have held up and which not? Maybe this one gets a B+? Not top drawer Le Guin, but good enough to read, and better yet if you catch the cross-cultural references and all the anthropological background works.
5. Jonathan Swift, Gulliver’s Travels, some cheap paperback edition. I did a quick, non-studied reread of this, in prep for the new Cambridge University Press reissue edition due out June 30, which has excellent notes and I will study and reread in more detail. One of the very best books! Not only is the story fully engaging and deeply humorous, but it is one of the seminal tracts on progress (largely skeptical), a blistering take on political correctness, wise on the virtues and pitfalls of travel, and one of the first novels to truly engage with science and politics and their interaction. Straussian throughout. Swift is one of the very greatest thinkers and writers and his output has held up remarkably well.
That was then, this is now, cryptocurrency edition
Nouriel Roubini, a blockchain basher who famously called Bitcoin “the mother of all bubbles,” is working to develop a suite of financial products including a tokenized asset intended to act as a “more resilient dollar” in the face of higher inflation, climate change and civil unrest.
Roubini, nicknamed “Dr. Doom” for his bearish views, sees room for an asset-backed digital coin that could help protect against higher prices and benefit from soaring demand for land and commodities, as well as a loss of confidence in fiat currencies. He’s working with Dubai-based Atlas Capital Team LP, which he joined two years ago as co-founder and chief economist, to create the new products.
In doing so, Roubini is tapping into growing concerns over the pace of inflation as well as speculation about the longer-term outlook for the dollar, with prominent financial voices including Bridgewater Associates LP’s Ray Dalio and Credit Suisse AG strategist Zoltan Pozsar having argued the U.S. currency risks gradually losing its reserve status.
The greenback’s lofty position could be in jeopardy as the U.S. “prints too much money and adversaries start de-dollarizing,” Roubini said in an interview. “We recognized that America’s dollar reserve currency could be at risk and are working to create a new instrument that’s effectively a more resilient dollar.”
Unlike many cryptocurrencies, Roubini stresses that the coin would be backed by real assets — a mix of short-term U.S. Treasuries, gold and U.S. property (in the form of Real Estate Investment Trusts, or Reits) that’s expected to be less affected by climate change.
Here is more from Bloomberg. Here are earlier writings of relevance. I’m all for new business ventures, but perhaps he has the inflation timing wrong on this one? In any case, welcome Nouriel to the Austrian School of Economics!
I Hate Paper Straws!
I am interviewed by James Pethokoukis at his substack Faster, Please! Here’s one Q&A:
JP: American political debates are generally more interested in redistribution than long-term investment for future innovation. What are the incentives creating that problem and can they be fixed?
A big part of the incentive problem is that future people don’t have the vote. Future residents don’t have the vote, so we prevent building which placates the fears of current homeowners but prevents future residents from moving in. Future patients don’t have the vote, so we regulate drug prices at the expense of future new drug innovations and so forth. This has always been true, of course, but culture can be a solution to otherwise tough-to-solve incentive problems. America’s forward looking, pro-innovation, pro-science culture meant that in the past we were more likely to protect the future.
We could solve many more of our problem if both sides stowed some of their cultural agendas to focus on areas of agreement. I think, for example, that we could solve the climate change problem with a combination of a revenue neutral carbon tax and American ingenuity. Nuclear, geo-thermal, hydrogen–these aren’t just clean fuels they are better fuels! Unfortunately, instead of focusing on innovation we get a lot of nonsense about paper straws and low-flow showers. I hate paper straws and low-flow showers! There is a wing of the environmental movement that wants to punish consumerism, individualism, and America more than they want to solve environmental problems so they see an innovation agenda as a kind of cheating. Retribution is the goal of their practice.
In contrast, what I want is for all of us to use more water, more energy and yes more plastic straws and also have a better environment. That’s the American way.
Subscribe to Faster, Please! for more.