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Energy’s future is both cleaner and dirtier
That is the topic of my latest Bloomberg column, here is one part:
In the short run gas will substitute for the much dirtier coal, but over the longer term fracking is competing with greener forms of energy production.
The bottom line: If you are bullish on green innovation, perhaps you should be bullish on innovation in fossil fuels as well.
One notable feature of energy is that it is easy to use more of it. If energy were truly cheap, people would take more plane trips, build more robots, desalinate more water and terraform more of the earth’s surface. These are wonderful ambitions, but they might lead the world to use both more green energy and more carbon-intensive energy.
And:
…it seems increasingly easy to imagine a world with wonderful green energy innovations and lots of carbon emissions — and people will praise the former to feel less bad about the latter.
Most likely, the world’s countries will develop their energy supplies in a sequential, rolling fashion. Japan developed economically before China, which in turn became industrial before Vietnam, and currently Vietnam is leading most of Africa. It could be that the world always has some growing countries that will want to use lots of fossil fuels, and a universal transition to solar power and good batteries could be distant.
Price pressures along the way could reinforce this basic logic. As green energy becomes more common, batteries may become more expensive, as they are based on a variety of scarce physical inputs. At the same time, the initial slack in demand for oil and gas, during a true green-energy transition, will make those resources very cheap. Is it such a sure bet that an industrializing Uganda will immediately and directly go the green energy route?
To be continued…
Wednesday assorted links
What true conservatives should care about
That is the theme of my latest Bloomberg column, here is the opening bit:
If you are a true conservative — and I use the term not as Ted Cruz might, but in its literal sense, as in conserving what is of value in the modern world — then you should be obsessed with three threats to the most vital parts of our civilizational heritage, all of which are coming to the fore: war, pandemic and environmental catastrophe.
These three events have frequently caused or contributed to the collapse or decline of great civilizations of the past. After being seriously weakened by pandemics and environmental problems, the Roman Empire was taken over by barbarian tribes. The Aztecs were conquered by the Spanish, who had superior weapons and also brought disease. The decline of the Mayans likely was rooted in water and deforestation problems.
I think of true conservatism as most of all the desire to learn from history. So let us take those lessons to heart.
Two further points:
1. I don’t think of this as existential risk, rather humanity could be set back very considerably, with uncertain prospects for recovery. In the median year of human history, economic growth is not positive. A few thousand years of “Mad Max” would be very bad.
2. I think you should aspire to be more than just a “true conservative.” You should be a liberal too! So there is more to the picture than what the column outlines. Nonetheless I see it as a starting point for reformulating a morally serious conservative movement…
Recommended.
That was then, this is now, again Russia/Ukraine edition
Circa 1919, with Ukraine under siege from the Bolshevik armies:
Things, however, did not soon improve. Again to take the case of Odessa, by the end of April electricity was running out. “Thus in one month they have brought chaos to everything,” Bunin snarled, “no factories, no railroads, no trams, no water, no bread, no clothes — no nothing!” In fact the Bolsheviks had inherited the chaos and the crisis; they also inherited — and exacerbated — the free-wheeling brutality displayed on all sides and of which…they were the beneficiaries. To this kind of panache they applied a new moral calculus.
That is from Laura Engelstein, Russia in Flames: War, Revolution, Civil War 1914-1921, which as noted yesterday is quite a good book, especially for viewing the Bolshevik Revolution through the eyes of what became the broader Soviet empire.
The Ukrainian economist who is fighting the Russians with logistics
This Bloomberg piece by Scott Duke Kominers is an interview with the heroic Tymofiy Mylovanov. He is an economist, also of the University of Pittsburgh, who is organizing many of the logistics in Ukraine and also running the Kyiv School of Economics. I am honored to know Tymofiy, here is one bit of a much broader story:
Mylovanov: Within the first couple of days, you see how people respond differently. Some people get traumatized; some become dysfunctional; others become almost super-efficient, like me and my team. But you have to figure out how to function in war or you die. Your loved ones will die. And we had a plan — war-time protocols at the university. We even had a war committee, and everyone was responsible for specific tasks, and they have to start executing them. Otherwise we collapse.
If someone doesn’t show up to a meeting, that doesn’t matter. Decisions are made without them. No wavering, no trembling hand. You either do it or you don’t do it and you accept the consequences. So we managed to shut down our facilities and put security in our buildings and the people there had food and water, and they’ve been staying there for two weeks.
There is much more detail in the article, which is interesting throughout. And:
Mylovanov: One specific thing: We need 307,000 medical kits. I have the specification. Let’s say Israel can only supply 30,000 and Canada probably can supply 20 or 30,000. But we have suppliers who can provide the medical kits. We give this specification to [Ukraine’s] Ministry of Health, and our charitable foundation will pay. So tag me or email me or ping me on Twitter — and then donate, please donate.
All the fundraising goes directly to logistics. I have a website at the university of the charitable foundation [Kyiv School of Economics Humanitarian Relief Fund], and there is a Twitter post at my account. If I get a hundred dollars on that charitable foundation, it goes towards medical kits and it’s likely going to save a life.
By the way, Tymofiy Mylovanov is widely published in economics journals, including Econometrica and JET. Here is Tymofiy on Twitter.
What I’ve been reading
1. John Elliott Cairnes, The Slave Power, from 1862. Cairnes remains greatly underrated as an economist. But The Slave Power is most remarkable for seeing that slavery was a system that pervaded (and corrupted) all aspects of the economy and society of the South. An excellent early integration of economic reasoning and sociology. And to think he wrote this from Galway, not Mississippi.
2. Barbara Bloemink, Florine Stettheimer: A Biography. A revelatory book that proves Stettheimer’s reputation deserves to be upgraded to the top tier of American artists of her time. The color plates are wonderful. I hadn’t known of her inspiration coming from Ballet Russe works. For those who care, definitely recommended, deserves to make the best of the year list.
3. Stanislaw Lem, The Invincible. One of the better Lems, reminds me of a Star Trek episode, with shades of gray goo hypotheses and an East Bloc ending.
I liked Meghan O’Rourke, The Invisible Kingdom: Reimagining Chronic Illness.
John Davis, Waterloo Sunrise: London from the Sixties to Thatcher is mostly a social history.
There is also Penelope J. Corfield, The Georgians: The Deeds and Misdeeds of 18th-Century Britain.
Jonathan Haskel and Stian Westlake, Restarting the Future: How to Fix the Intangible Economy elicited this blurb from me: “How does the concept of intangible capital help explain some features of what has gone wrong in our world? How is the concept of intangible capital key to fixing what has gone wrong and improving our world? This is the go-to book for those and other critical questions for boosting economic growth.”
*Oceans of Grain*
A good book, think of it as a more general (non-technical) economic history of wheat, authored by Scott Reynolds Nelson. The sad thing is the book’s subtitle: “How American Wheat Made the World” — yes it covers America, but a lot of the book, and I would say its best parts, focus on Russia and Ukraine.
I guess the publisher figured American readers don’t care that much about Ukraine? Here is one excerpt:
Before Odessa [which had just been described as a major grain port], the Russian Empire had expanded slowly and defensively, one line of forts at a time. After Odessa, Russia — just like the United States — possessed foreign exchange and could expand dramatically. Wheat exports allowed the Russian Empire to fund its foreign wars, and so it surged into Poland, across the Caspian Sea, and toward China. Nothing seemed capable of stopping the yeasty, kvassy expansion of the Russian Empire. In fact, the spread of a different invisible creature, an invisible water mold, would further entrench Odessa as Europe’s city of wheat.
And this:
Fish sandwiches emerged as a regular meal for workers in Britain around 1870 once American grain arrived; a decade later this became fish and chips.
A fun book for me.
Fishy Results on Ocean Acidification
The replication crisis isn’t just about social psychology. A meta-analysis of the effect of ocean acidification on fish behavior shows a big decline in effect size as the studies get larger and better.
Using a systematic review and meta-analysis of 91 studies empirically testing effects of ocean acidification on fish behavior, we provide quantitative evidence that the research to date on this topic is characterized by a decline effect, where large effects in initial studies have all but disappeared in subsequent studies over a decade. The decline effect in this field cannot be explained by 3 likely biological explanations, including increasing proportions of studies examining (1) cold-water species; (2) nonolfactory-associated behaviors; and (3) nonlarval life stages. Furthermore, the vast majority of studies with large effect sizes in this field tend to be characterized by low sample sizes, yet are published in high-impact journals and have a disproportionate influence on the field in terms of citations. We contend that ocean acidification has a negligible direct impact on fish behavior, and we advocate for improved approaches to minimize the potential for a decline effect in future avenues of research. [emphasis added, AT]
Sunday assorted links
1. MIE: “For $995, Love Cloud will fly you and a partner in a private airplane for 45 minutes so that you can have sex.” (NYT)
3. Is the hotel minibar disappearing?
4. Nasal vaccines (NYT).
5. Tim Harford’s ten best books for thinking about numbers and statistics.
6. The debate at the time as to whether Ukraine should have given up nuclear weapons (NYT).
7. MIE: First Norwegian salmon vending machine.
8. Claims about Ottawa, also reflecting “context is that which is scarce.”
Gulf of Guinea fact of the day
Worryingly, the security threats in west Africa now include piracy in the Gulf of Guinea. In 2020, all but one of the world’s 28 kidnappings recorded at sea occurred in these waters. Similarly, in 2018, all six hijackings at sea, and 13 of the 18 incidents of ships fired upon occurred in the Gulf of Guinea. Of the 141 hostages held at sea that year, 130 were captured by pirates here.
Here is the full FT story.
How to start art collecting
The answer here depends so much on how much money and how much time and how much interest you have that I can’t give you a simple formula. Nonetheless here are a few basic observations that might prove useful at varying levels of interest:
1. At some you should just start buying some stuff. You’re going to make some mistakes at first, treat that as part of your learning curve and as part of the price of the broader endeavor.
2. Don’t ever think you can make money buying and selling art. The bid-ask spread is a bitch, and finding the right buyers is a complex and time-consuming matching problem.
3. Art is strongly tiered in a hierarchical fashion. That means most fields are incredible bargains, at least relative to the trendy fields. A lot of HNW buyers are looking for large, striking contemporary works they can hang over their sofas in their second homes in Miami Beach or Los Angeles or Aspen. Good for them, as many of those works are splendid. Nonetheless that opens up opportunities for you. I find the price/beauty gradient ratio can be especially favorable for textiles, ethnographic works, Old Master drawings (and sometimes paintings), paintings from smaller or obscure countries, various collectibles, and many other areas.
4. As for the price/beauty gradient, prints, lithographs, and watercolors usually are much cheaper than original paintings. And they are not necessarily of lower quality. Figure out early on which are the artists whose prints can be as good or better than many of their original works (Lozowick, Picasso, and Johns would be a few nominees) and learn lots about those areas. A Goncharova painting can costs hundreds of thousands or millions of dollars, but one of her Ballet Russe designs — an original done by the same hand — can go for thousands.
4b. The “mainstream art market” still discriminates in favor of “original” works, but it already has started laying this convention aside for photographs, and I wonder if further erosion along these lines is not on the way. The “internet generation” is getting wealthier all the time, and do they all hate reproducibility so much?
5. Pick a small number of areas and specialize in them. Learn everything you can about them. Everything. Follow auction results. Read about their history. Read biographies of their creators. Go visit exhibitions. And so on. It is also a great way to learn about the world more generally.
6. If you are an outsider, you can’t just walk up to a gallery and buy the best stuff at a market clearing price. You have to invest in your relationships there. Or consider buying at auction. Whatever your choice, be aware of the logic and why things work that way. Selling practices are also an exercise in reputation management of the artist and of the gallery, and maybe they think you are not up to snuff as a buyer!
7. Visit other people’s art collections as much as you can. You will learn a great deal this way, and learn to spot new forms of foolishness that you had never before imagined.
8. Don’t treat art collecting as like shopping, or as motivated by the same impulses. If you do, you will accumulate a lot of junk very quickly. Thinking of it more as building out a long term narrative of what an artistic field, and a culture, is all about. Fine if you don’t want to do that! It is a demanding exercise, and if you wish to escalate your collecting to higher levels, you need to ask yourself if you are really up for that. Does it sound like something you would be good at?
9. Fakes are rampant in so many parts of the art world, but they are especially likely if the artist is “popular” (e.g., Chagall, Dali) or if the style is easily copied ex post (Malevich). In contrast, if you buy a piece of complex stained glass, it is probably the real thing. The major auction houses are usually reasonably good at rooting out fakes, but there is no institution you can trust 100 percent. And sometimes, as with the recently auction Botticelli and da Vinci paintings, no one really knows for sure (Botticelli pro and con; in any case I don’t like the work, certainly not for $45 million).
10. Don’t buy art on the basis of the artist’s name. This is a good way to end up with a lot of crap and, for that matter, fakes. Just about every famous artist has a fair number of mediocre works, overpriced at that. (That said, if you really just want to “collect names,” you will find it is remarkable on a limited income just how many top names you can wrack up.)
11. Few of the important art collections were built by just throwing tons of money at the task. That is a recipe for being ripped off, and it attracts poor quality sellers to your orbit. You have to understand something more deeply than other people do. Obviously money helps, but you can’t rely on outbidding others as your most important ally.
12. Maybe sometime I’ll tell you the story of how I obtained an especially fine, rare work by throwing a stone at a wild dog in rural Mexico. Or how I tracked another painter down at the mental hospital.
13. Get a mentor!
There is much more I could say of relevance (e.g., how to present yourself to dealers? how to avoid winner’s curse?), but I’ll stop there for now.
My excellent Conversation with the excellent Stewart Brand
Here is the audio, transcript, and video, here is part of the CWT summary:
Tyler and Stewart discuss what drives his curiosity, including the ways in which he’s a product of the Cold War, how he became a Darwinian decentralist, the effects of pre-industrial America on his thought, the subcultural convergences between hippies and younger American Indians, why he doesn’t think humans will be going to the stars, his two-minded approach to unexplained phenomena, how L.L. Bean inspired the Whole Earth Catalog, why Silicon Valley entrepreneurs don’t seem interested in the visual arts, why L.A. could not have been the home of hippie culture and digital innovation, what libertarians don’t understand about government, why we should bring back woolly mammoths, why he’s now focused on maintenance and institutions, and more.
COWEN: As you know, San Francisco was a relatively small city. Why did it, and not Los Angeles, become the center of hippie culture?
BRAND: That’s a fair question. Los Angeles never had 49ers. Los Angeles never burned to the ground. San Francisco — the phoenix city, they still say sometimes — has waves of boom and bust. It’s not particularly infrastructural. Los Angeles is completely based on oil and then water infrastructure and major shipping, even more than the Bay Area.
There’s a frivolousness that the Bay Area is good at. It has two universities of significance, with Stanford and Cal. So does LA, but LA does not feel like a college intellectual world, whereas San Francisco somewhat does. Silicon Valley really is an outgrowth of the industrial park at Stanford [laughs] that was invented by one guy. Then those things, as you know, take off economically. They feed themselves, and then they become their own storm system.
There’re a lot of people like me from the Midwest who come to places like California, and one of the things I saw — because I spent time on the East Coast in prep school, and then in New Jersey as a military officer, and then a lot in New York as an artist — the sense I got is that people go to New York and LA to be successful. If you can make it in the Big Apple, you can make it anywhere — that sort of thing. Nobody says that about San Francisco. They never have, and I bet they never do.
People go to San Francisco to be happy, by and large, and then that leads to sort of a devil-may-care creativity, which is actually good for business startups of certain kinds, especially ones that have a low threshold, like anything digital or anything online. Screwing around is not only possible but encouraged, and screwing around is a way you discover new, useful things in the world, I think. I knew by the time I graduated from Stanford that I wanted to stay in the Bay Area. I went away to be in the army, and then I came right back.
Interesting throughout.
China’s Private Cities
In Rising private city operators in contemporary China, Jiao and Yu report that China’s private cities are growing.
…the last decade has witnessed a large growth in private city operators (PCOs) who plan, finance, build, operate and manage the infrastructure and public amenities of a new city as a whole. Different from previous PPPs, PCOs are a big breakthrough…they manage urban planning, industry development, investment attraction, and public goods and services. In other words, the traditional core functions of municipal governments are contracted out, and consequently, a significant neoliberal urban governance structure has become more prominent in China.
In the new business model, the China Fortune Land Development Co., Ltd. (CFLD) was undoubtedly the earliest and most successful. It manages 125 new cities or towns with a total area of over 4000 km2. Founded in 1998, the enterprise group has grown into a business giant with an annual income of CNY 83.8 billion in 2018. The company’s financial statements demonstrate that the annual return rate of net assets has grown as much as 30% annually from 2011 to 2018, which is the highest among the Chinese Fortune 500 companies.
As Rajagopalan and I argued in Lessons from Gurgaon, India’s Private City the key development has been to scale large enough so that the private operator internalizes the externalities. Quoting Jiao and Yu again:
The key to solving this problem is to internalize positive externality so that costs and benefits mainly affect the parties who choose to incur them. The solution of the new model is to outsource Gu’An New Industry City as a whole to CFLD, which becomes involved in the life cycle including planning, infrastructure and amenity construction, investment attraction, operations and maintenance, and enterprise services. In this way, a city is regarded as a special product or a spatial cluster of public goods and services that can be produced by the coalition of the public and private sectors. The large-scale comprehensive development by a single private developer internalizes the externality of non-exclusive public amenities successfully and achieves a closed-loop return on investment.
As a result private firms are willing to make large investments. In Gu’An, an early CFLD city, for example:
CFLD has invested CNY 35 billion to build infrastructure and public amenities, including 181 roads with a length of 204 km, underground pipelines of 627 km, four thermal power plants, six water supply factories, a wastewater treatment plant, three sewage pumping stations, and 30 heat exchange stations. The 2018 Statistical Yearbook of Langfang City illustrates that the annual fiscal revenue increased to CNY 9 billion, and the fixed asset investment was approximately CNY 20 billion, and Gu’An achieved great success in terms of economic growth and urban development strongly promoted by the collaboration with CFLD.
By the way, The Journal of Special Jurisdictions, is looking for papers on these cities:
Although a relatively recent phenomenon in urban development, Chinese Contract Cities already cover 66,000 square kilometers and house tens of millions of residents. They host a wide range of businesses and have attracted huge amounts of investment. In cooperation, local government entities, private or public firms plan, build and operate Chinese contract cities. Developers obtain land via contracts with local government or long-term leases with village collectives and enjoy revenues generated from economic activity in the planned and developed community. Residents contract a management firm for housing and other municipal services. In that way, Chinese contract cities offer innovative solutions to urban finance, planning, and management challenges.
The Chinese Contract Cities Conference will offer the world’s first international gathering of experts on this important new phenomenon.
…The proceedings of the Chinese Contract Cities Conference will appear in the Journal of Special Jurisdictions.
See also my previous post on Jialong, China’s Private City.
My Israel-only Conversation with the excellent Russ Roberts
Here is the audio, video, and transcript, here is the CWT summary:
In this special crossover special with EconTalk, Tyler interviews Russ Roberts about his new life in Israel as president of Shalem College. They discuss why there are so few new universities, managing teams in the face of linguistic and cultural barriers, how Israeli society could adapt to the loss of universal military service, why Israeli TV is so good, what American Jews don’t understand about life in Israel, what his next leadership challenge will be, and much more.
We didn’t shy away from the tough stuff, here is one question:
COWEN: Let me ask you another super easy question. Let’s say we think that under current circumstances, a two-state solution would not lead to security either for Israel or for the resulting Palestinian state. Many people believe that. Let’s say also, as I think you believe, that a one-state solution where everyone votes would not lead to security for a current version of Israel or even a modified version of it.
Let’s say also that the current reliance of the Palestinian territories on the state of Israel for protection, security, intelligence, water — many important features of life — prevent those governing bodies from ever attaining sufficient autonomy to be a credible peace partner, guaranteer of its own security, and so on. From that point of view, what do we do? We’re not utilitarians. We’re thinking about what’s right and wrong. What’s the right thing to do?
Do read Russ’s answer! (Too long to excerpt.) And:
COWEN: Now, the United States has about 330 million people, yet there are more Israeli TV shows I want to watch than American TV shows. There’s Srugim, there’s Shtisel, there’s Prisoners of War, there’s In Judgment, there’s Tehran. There’s more. Why is Israeli TV so good?
ROBERTS: I’m glad you mentioned Prisoners of War, which doesn’t get enough — Prisoners of War is in my top five. If I had to list my top five, I’d pick Shtisel, Prisoners of War, The Americans, probably The Wire, and The Crown. Do you have a top five that you could reel off?
COWEN: The Sopranos would be my number one. Srugim and Prisoners of War plausibly would be in my top five.
We then consider the Israeli topic at hand. Interesting throughout, a very good dialogue.
Friday assorted links
1. David Brooks on America falling apart (NYT).
2. Jonah Goldberg is right. And Megan McArdle is right.
3. Shawn Bradley’s life is tough.
4. “Likewise, authors from the same PhD program or who previously worked with the reviewer are significantly more likely to receive a positive evaluation. We also find that sharing “signals” of ability, such as publishing in “top five”, attending a high ranked PhD program, or being employed by a similarly ranked economics department significantly influences editor decisions and/or reviewer recommendations.” Link here.
5. So a virus triggers multiple sclerosis? And more here (NYT). And, not unrelated, the nature of Long Covid.
6. Links from Chris Blattman, who is blogging again.
7. Good Bridgewater/Dalio piece (FT).