Catallaxy Files

So another day another IPCC scandal. The ABC – our ABC – have a great headline, UN climate claims ‘based on student essay’. At this point, you got to know they’re in trouble.

So there has been a huge lapse in quality control. How could such a thing happen? Perhaps because Rajendra Pachauri has been writing ‘adult literature‘. Field work for such an effort must leave one simply too exhausted to do anything else. More saucy details here. As Anthony Watts says

Time to kick Pachy to the curb, he’s not just toast now, he’s carbonized.

The more I think about, the more I believe he deserves that Nobel Prize he got 2007.

As we know the IPCC has been rocked by scandal – ClimateGate, GlacierGate and so on. Pat Michaels suggests IPCC-gate, and some wit I saw in a comments thread suggested FloodGate. The New Scientist has an editorial discussing these issues and the IPCC.

So let the IPCC embrace such debates, rather than retreat from them in the name of spurious consensus. Climate scientists have felt under siege from critics, as leaked emails last year amply demonstrated. But that is no reason to dismiss all criticism as necessarily unwarranted, uninformed or politically motivated.

Some argue that the views of an untutored blogger, or even a scientist from another discipline, should never carry the same weight as those of someone with a lifetime’s expertise in a relevant field. But if occasionally the emperors of the lab have no clothes, someone has to say so. The wider review of science made possible by the blogosphere can improve science and foster public confidence in its methods. Scientists should welcome the outside world in to check them out. Their science is useless if no one trusts it.

No nitpicking – I think that’s fair enough.

What I want to draw attention to these two sentences.

The IPCC was established before the internet revolution. Like it or not, its closed world of peer review is no longer possible, let alone desirable.

Is the New Scientist suggesting that the IPCC abandon its own peer-review process (something it looks like they have already done, without telling anybody) or that the IPCC abandon its reliance on peer-reviewed literature (something it looks like they have already done, without telling anybody)? I am not convinced that were they to do so that the IPCC would be adding any value. Without the peer review process the IPCC become just another lobby group. While I’m not opposed to lobby groups – debate, discussion and dispute play a very important role in the market for ideas – I can’t see why we would then place any credence in yet another UN lobby group (financed by our tax dollars).

Many people blame the global financial crisis on ‘free-market’ economics and the teachings of some economists. In particular the Chicago school has come in for some criticism. John Cassidy, for example, has a long piece in the New Yorker (subscription required) where he seems to lay the blame squarely at the feet of the Chicago school. Cassidy relies heavily on the opinions of Richard Posner. From the introduction

Earlier this year, Posner published “A Failure of Capitalism,” in which he argues that lax monetary policy and deregulation helped bring on the current slump. “We are learning from it that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails,” Posner writes. “The movement to deregulate the financial industry went too far by exaggerating the resilience–the self-healing powers–of laissez-faire capitalism.” Posner also accuses professional economists, including some of his Chicago colleagues, of being “asleep at the switch.”

I find the argument that ‘lax monetary policy and deregulation’ as some form of market failure somewhat surprising; I would categorise those as government failure. But moving right along (emphasis added)

… Ever since Milton Friedman, George Stigler, and others founded the Chicago School, in the nineteen-forties and fifties, one of its goals has been to displace Keynesianism, and it had largely succeeded. For three decades after the Second World War, economics was dominated by Keynesian ideas about how the government should use monetary and fiscal policy to prevent slumps. Since 1974, however, more than a dozen scholars associated with the U. of C. have been awarded the Nobel Memorial Prize in Economic Sciences; in the areas of regulation, trade, anti-trust law, taxes, interest rates, and welfare, Chicago thinking greatly influenced policymaking in the United States and many other parts of the world.

That is a testable hypothesis and John Taylor puts it to the test.

Consider, for example, measuring influence by the representation of members of a school in top economic positions in government where there is an opportunity to influence policy. And consider as a measure of an economist’s school, the university where he or she received the PhD. The data in the chart follows this approach. It shows the university PhD percentages of appointees to the President’s Council of Economics Advisers (CEA).

The blue line shows the percentage of presidential appointees to the CEA who have a PhD from Chicago. The red line shows the same for MIT or Harvard (Cambridge), one possible definition of an alternative to the Chicago school. The years from the creation of the CEA in 1946 until 1980 are shown along with each presidential term thereafter. Observe that the peak of the Chicago school influence was in the Reagan administration; it then dropped off markedly. In contrast Cambridge reached a low point of zero appointees to the CEA during the Reagan administration and then rose slightly to 20 percent in Bush 41, to 82 percent in Clinton, and to 100 percent in both Bush 43 and in Obama.

Blaming the financial crisis on the free-market influence of the Chicago school is certainly not consistent with these data. There were no Chicago PhDs on the President’s CEA leading up to or during the financial crisis. In contrast there was a great influx and then dominance of PhDs from Cambridge. And also notice that there were plenty of Chicago PhDs on the CEA at the time of the start of the Great Moderation—20 plus years of excellent economic performance. These data are more consistent with the view that the waning of the free-market Chicago school and the rise of interventionist alternatives was largely responsible for the crisis. But the main point is that there is no evidence here for blaming the influence of Chicago.

Of course, such measures are imperfect. Neither Milton Friedman nor Paul Samuelson served on the CEA, but their students did. And while PhDs from any insitution certainly do not fit in any one mold, the people who learned about rules versus discretion with Friedman likely had a different policy approach than people who learned about rules versus discretion with Samuelson. The data are robust when you look beyond the CEA to other top posts normally held by PhD economists. All assistant secretaries of Treasury for Economic Policy appointed during the Bush 43 and Obama Administrations had PhDs from Harvard. During the same period, all chief economists appointed to the IMF had PhDs from MIT, and, except for Don Kohn, who was promoted from within and Susan Bies who was appointed as a banker, all PhD economists appointed to the Federal Reserve Board were from Cambridge MA.

Taylor’s own PhD is from Stanford.

The AGW lobby would have us believe that the opportunity costs of their proposed policies are quite low. Just yesterday in a Financial Review op-ed John Quiggin wrote

No credible economist suggests the economic impact will be more than marginal.

Clive Hamilton describes the opportunity costs of AGW in a New Matilda piece (emphasis added, the Atkin paper is here)

I have often wanted to put the following question to sceptics like Don Aitkin: What if you are wrong? What sort of moral responsibility will the sceptics have if they succeed in their aim of stopping the world from taking action to reduce greenhouse gas emissions?

If scientific advances cause scientists to reject the conclusions of past IPCC reports and agree that there is nothing to be alarmed about, it will be mildly embarrassing for people like me; but not too much harm will have been done — according to all of the economic studies, the costs of reducing emissions are low.

But if Aitkin and his fellow sceptics were successful in stopping policies to cut emissions and the IPCC projections turn out to be correct, then environmental catastrophe will follow and millions of people will die. Do they lose sleep over this? Do they worry about how their grandchildren will see them? Or are they so consumed by their crusade that they know they will never be proven wrong?

Okay – so the stakes are (apparently) high. Notice the asymmetry in the opportunity cost; very little if the AGW lobby are wrong and very high if the AGW lobby are correct. Mind you those assessments of the relative costs comes from the AGW lobby itself.

This brings me to a very carefully worded op-ed published in both the Age and SMH by Tim Wallace. He is having a go at Christopher Monckton. In particular this point

Christopher Monckton’s rhetorical tilts against wind turbines might be regarded as humorously quixotic, but his spinning of deeply flawed American and European biofuel policies into a blanket denuciation of all climate change action, accusing “environmental extremists” of “eagerly” starving to death millions of the world’s poor, is no laughing matter. At best this argument is recklessly simplistic; at worst it is deliberately disingenuous.

This might lead the reader to believe that Monckton is incorrect in linking climate change policy to starvation. Apparently he has made the argument for some time – as have others. As Wallace admits the so-called ‘biofuels genocide’ argument has an excellent pedigree (emphasis added).

Monckton is not the first person to link biofuels to genocide (Fidel Castro, for example, did so in April 2007) or to call using food for fuel a crime against humanity (the UN special rapporteur on the right to food, Jean Ziegler, called it such in October 2007). In Monckton’s own nation, Guardian columnist George Monbiot warned as early as 2004 that biofuels could lead to humanitarian and environmental disaster.

“Every potential solution must be handled carefully,” said Al Gore, the man climate sceptics most love to hate, at the first Biofuels Congress of the Americas held in Buenos Aires in May 2007. The twin dangers of biofuel production if not pursued carefully, he said, were further deforestation and the driving up of food prices. Greenpeace, the Worldwide Fund for Nature, Friends of the Earth, the Sierra Club and so on are all in furious agreement: food crops should not be used to fuel vehicles.

I’m not sure if Fidel Castro fits into that group, but the Age did publish an op-ed from him just last month.

So far, so good. It seems there might be something in the argument about the AGW scare leading to food shortages. But then Wallace does something very interesting (emphasis added).

That the diversion of food crops to biofuel production has been the main contributor the doubling of staple food prices in recent years need not be disputed, though Monckton’s crediting that rise to “a sharp drop in world food production, caused by suddenly taking millions of acres of land out of growing food for people who need it” is a less than accurate representation of the document he cites as his reference.

Wallace then goes onto imply that Monckton’s argument is inconsistent with a World Bank publication that Monckton quotes. Wallace doesn’t tell us what that document is, but he gives enough clues to track it down (or, at least, I have tracked down a document based on his clues).

An internal World Bank working paper was leaked to the Guardian newspaper in 2008 that indicated that biofuel production was responsible for the bulk of rising food prices.

This document is marked ‘Draft, not for citation or circulation’. The subsequent ‘official’ World Bank copy is here. A critique of the paper can be found here. The World Bank have another paper on their website that makes the same points.

Increased bio-fuel production has contributed to the rise in food prices. Concerns over oil prices, energy security and climate change have prompted governments to take a more proactive stance towards encouraging production and use of bio-fuels. This has led to increased demand for bio-fuel raw materials, such as wheat, soy, maize and palm oil, and increased competition for cropland. Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for bio-fuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses. Other developments, such as droughts in Australia and poor crops in the E.U. and Ukraine in 2006 and 2007, were largely offset by good crops and increased exports in other countries and would not, on their own, have had a significant impact on prices. Only a relatively small share of the increase in food production prices (around 15%) is due directly to higher energy and fertilizer costs.

There can be little doubt that the World Bank believes that demand for biofuels has caused the bulk of the increase in food prices.

How does Wallace describe the World Bank position?

It attributed 70-75 per cent of price rises to biofuel-driven demand “and the related consequences of low grain stocks, large land use shifts, speculative activity and export bans”. It identifies US and European Union subsidies, mandates and import tariffs to promote domestic biofuel production as the main problem.

As if they were somehow separate from the increased demand for biofuels. But that is not how the World Bank describe it.

the most important factor was the large increase in biofuels production in the U.S. and the EU. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due to other factors, such as droughts, would have been more moderate. Recent export bans and speculative activities would probably not have occurred because they were largely responses to rising prices.

So Wallace is creating a bit of a straw man here. Where Wallace is correct is in arguing that the agricultural policies of the EU and the US are economically irresponsible. We know that and this is a point well worth repeating. So too are Australian quarantine policies – they are a disgraceful impediment to free trade in agricultural goods.

The other straw man worth noting is the entire premise for the op-ed. I saw Monckton making the biofuel – food trade-off argument here (at 5:40 minutes into the debate). I didn’t see him referring to either ‘extremists’ or ‘eagerly’ starving people to death; I did see him saying that it was a disgrace, and David Koch agreeing that it was a disgrace. At best Wallace can argue that Monckton hasn’t described the mechanism whereby biofuels have crowded out food production and reduced food security, but when everyone agrees that this is what has happened it is a bit rich to attack Monckton’s description of the argument and somehow imply that it isn’t happening. More importantly it shows that there are very real costs associated with the AGW lobby being wrong.

Earlier this week I put up a graph from the CBO via Mankiw that showed US Outlays and Revenues as a percentage of GDP over the past 40 years and going forward another ten years in forecasts.

So I was wondering what the Australian equivalent graph might look like.

I have taken the data from the Budget papers and then updated the 2008-09 onwards data from the Mid-Year Economic and Fiscal Outlook. The government have been a bit naughty, I think, downgrading their expected revenue as a percentage of GDP in the MYEFO relative to the Budget Papers. But they also decreased their expected Payments as a percentage of GDP.

As can be seen in both the US and Australian cases the problem facing government is excessive spending. So rather than talking about the need to raise revenue – expected revenue is reverting to the average, we should be looking to cut spending. As I argued before the US spending cuts are a step in the right direction but not nearly enough. The front page of todays Financial Review reports that the Rudd government is considering bringing forward spending cuts. Good – this is a matter of some urgency. Apart from depriving some orangutans of funding the Rudd government has shown no ability to make tough spending cut decisions.

Barack Obama just gave his first State of the Union address. His comments on employment and job creation were not consistent with facts in the public domain.

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right – the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster. But you don’t have to take their word for it.

No let’s not take their word for it; let’s look at the promises and statistics.

So how’s that Recovery Act working for you?

[youtube]http://www.youtube.com/watch?v=_7HvURBhMGE&feature=fvst[/youtube]

Tyler Cowen points to a very interesting article on European economists at US universities.

One-third of the faculty of Harvard University’s economics department hails from Europe. At the University of Chicago’s Booth School of Business, half of the finance department’s faculty is European. And these schools aren’t alone: European economists are overrepresented at all first-tier American universities and have had a huge influence on economic thinking, doing cutting-edge research in areas ranging from modeling financial markets to assessing risk.

These academics—most of them young rising stars escaping the mediocrity and politicization of economics departments in their countries of origin—see top American schools as the best places to study and teach. “When one wants to become a real economist, to accumulate knowledge and recognition, one has no choice but the United States,” says Chicago’s Luigi Zingales, an Italian who is a leader in the hot field of financial regulation. He’s right—for the time being, anyway.

Cowen has commented on this before.

In percentage terms, fewer and fewer economists are Americans by birth and upbringing. Non-Americans are less likely to be fully fluent in English, which encourages mathematics. Non-Americans also tend to be less market-oriented in their thought. In any case they are less likely to stand along traditional U.S. ideological fault lines or even share ideological fault lines with each other.

The ideology issue is quite interesting.

Obsolete and disproved Marxist and socialist thinking also remained strong within European universities, including in economics departments. Many young economists, scientifically oriented and so recognizing the superiority of free markets, found the climate intellectually stultifying. It remains the case that most French and Italian universities teach economics as a philosophical subject—with opinions mattering as much as facts—not a scientific subject. A Keynesian, statist perspective still dominates most European curricula: free-market professors are an embattled minority.

American economic departments were—and are—much more rigorous and nonpartisan by comparison. Yet isn’t there an ideological opposition between, say, the University of Chicago, known as a cradle of free-market theory, and Harvard, a supposedly liberal campus? “This perception hasn’t much to do with reality,” Bertrand responds. “We are scientists, above all; ideologies do not dictate our research or our teaching.” Alesina, a strong proponent of markets, agrees: “The notion of Harvard being liberal and Chicago free-market doesn’t coincide with academic reality.”

Perhaps Cowen’s ‘less market-orinetated’ European economist is considered a raving right-winger back in Europe.

In May of 2008 a series of emails were exchanged by the Team. First from Tim Osborne to Caspar Ammann.

Our university has received a request, under the UK Freedom of Information law, from someone called David Holland for emails or other documents that you may have sent to us that discuss any matters related to the IPCC assessment process. We are not sure what our university’s response will be, nor have we even checked whether you sent us emails that relate to the IPCC assessment or
that we retained any that you may have sent.

Okay, that seems fair enough, Ammann replies

Oh MAN! will this crap ever end??

Well, I will have to properly answer in a couple days when I get a chance digging through emails. I don’t recall from the top of my head any specifics about IPCC.
I’m also sorry that you guys have to go through this BS. You all did an outstanding job and the IPCC report certainly reflects that science and literature in an accurate and balanced way.

That last bit needs some repeating and emphasis.

the IPCC report certainly reflects that science and literature in an accurate and balanced way

Yes, well. There you have it; ‘accurate and balanced’. But then the cover up starts. An email from Phil Jones.

Although requests (1) and (2) are for the IPCC, so irrelevant to UEA, Keith (or you Dave) could say that for (1) Keith didn’t get any additional comments in the drafts other than those supplied by IPCC. On (2) Keith should say that he didn’t get any papers through the IPCC process.either. I was doing a different chapter from Keith and I didn’t get any. What we did get were papers sent to us directly – so not through IPCC, asking us to refer to them in the IPCC chapters. If only Holland knew how the process really worked!! Every faculty member in ENV and all the post docs and most PhDs do, but seemingly not Holland.
So the answers to both (1) and (2) should be directed to IPCC, but Keith should say that he didn’t get anything extra that wasn’t in the IPCC comments. As for (3) Tim has asked Caspar, but Caspar is one of the worse responders to emails known. I doubt either he emailed Keith or Keith emailed him related to IPCC. I think this will be quite easy to respond to once Keith is back. From looking at these questions and the Climate Audit web site, this all relates to two papers in the journal Climatic Change. I know how Keith and Tim got access to these papers and it was nothing to do with IPCC.

So everyone ‘could’ or ‘should’ say this or that. No suggestion that they simply tell the truth.

These emails are now in the public domain. As Ammann indicated

If I would consider my texts to potentially get wider dissemination then I would probably have written them in a different style.

Watts up with that? is reporting an email press release from a Graham Smith Deputy Commissioner in the UKs Information Commissioners Office that is potentially explosive. (I can’t find a copy on the ICO website, so I can’t be sure of its veracity).

Norfolk Police are investigating how private emails have become public.
The Information Commissioner’s Office is assisting the police investigation with advice on data protection and freedom of information.

The emails which are now public reveal that Mr Holland’s requests under the Freedom of Information Act were not dealt with as they should have been under the legislation. Section 77 of the Freedom of Information Act makes it an offence for public authorities to act so as to prevent intentionally the disclosure of requested information. Mr Holland’s FOI requests were submitted in 2007/8, but it has only recently come to light that they were not dealt with in accordance with the Act.

The legislation requires action within six months of the offence taking place, so by the time the action taken came to light the opportunity to consider a prosecution was long gone. The ICO is gathering evidence from this and other time-barred cases to support the case for a change in the law. It is important to note that the ICO enforces the law as it stands – we do not make it.

These comments are quite extraordinary, if confirmed to have originated in the ICO. While the period the bring a prosecution has passed (a huge loophole in the UK FOI legislation) there can be little doubt that in Smith’s opinion a violation of the UK FOI legislation has occurred. I also think it is quite incredible that a public official would express such a strong opinion before the police inquiry is concluded.
Update I: The Times Online is now reporting the story and, via Bolt, so too is the Norwich Evening Times.
Update II: John O’Sullivan at Climategate is suggesting that Phil Jones can still be prosecuted for fraud under the UK Fraud Act (2006). While many of the actions appear to have occurred before 2006, I understand that the legislation simply formalises the common law position.