Catallaxy Files

Rudd concedes his economic policies will increase interest rates.

“Australia was the only advanced economy in 2009 not to go into recession,” he said.

“That’s come off the back of strong action by ourselves through our national stimulus strategy, school modernisation plan and through the banks, to bring down interest rates as radically and quickly as they did.

“But obviously there’s going to be upward adjustment.”

No mention of a generation of economic reform that is more likely to have insulated the economy. But when you’re busy reregulating the economy you hardly want draw attention to little things like that.

Interest rates are going up next week. Inflation remains high. Before the last election Rudd and Swan had heaps to say about inflation, so let’s have a look at the inflation record over the past few years. I have graphed the variable the RBA looks at – the average of the Weighted Median and Trimmed Mean measures of inflation.

Doesn’t look good. The RBA measure hasn’t once fallen into the 2 – 3 percent band that they target in the last two years (despite the greatest economic crisis since the great depression).
Update: Stephen Long on ABC PM has just said that the preferred RBA inflation measure is the lowest it has been in three years – that is incorrect. It is the lowest since September 2007.

Paul Krugman is very upset.

And it’s a betrayal of everything Obama’s supporters thought they were working for. Just like that, Obama has embraced and validated the Republican world-view — and more specifically, he has embraced the policy ideas of the man he defeated in 2008. A correspondent writes, “I feel like an idiot for supporting this guy.”

Well, yes. The issue here is Obama’s proposed spending freeze.

President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.

The WSJ is unimpressed.

Mr. Obama’s touted spending freeze for some domestic agencies is the politics of gesture. It would apply to only 17% of the budget, and these programs have already had a 22% increase in their annual appropriations in the past two years, and another 25% increase including stimulus.

To get some idea of the extent of the problem, see this chart from Greg Mankiw.

In that graph we can see the ‘Bush spendathon’ – he actually spent within the average over 1970 – 2009 but revenues declined in his first term before making a recovery in his second term. Obama has spent well beyond the average and plans to continue doing so. So even when (if?) US tax revenue recovers the US will still be running a huge deficit.

So whether or not Obama will succeed in cutting spending, at least he and his administration have recognised the problem. Last word to the WSJ.

The tragedy is that Mr. Obama’s fiscal conversion is coming a year too late, assuming it is now real. If the President and his party really are serious, they can do more than promise a spending freeze after 2012. They can stop spending more now: Drop the health-care bill, cancel the unspent stimulus spending from last year, kill the $150 billion new stimulus that has already passed the House, and bar all repaid bailout cash from being re-spent. Everything else is marketing.

It seems Tony Abbott has caused something of a kafuffle by advising his daughters not to engage in premarital sex. All the luvvies are out in force carrying on about how outrageous this is.* Mind you I’m sure many fathers of teenage daughters give exactly that same advice and failing that say ‘please be careful’. Of course, others might argue that Abbott is a hypocrite; afterall he speaks of his own behaviour as a young man in his recent book Battlelines. That’s life; its unfair and there do seem to be different standards for males and females. As in many of these differences the biological division of labour plays a large role.

Eric Crampton points to an interesting NBER paper (ungated version here). From the conclusion

Engaging in a premarital conjugal relationship in yesteryear was a perilous activity for a young woman. The odds of becoming pregnant were high, given the primitive state of contraception. The economic consequences of an out-of-wedlock birth were dire for a young woman. Being born in or out of wedlock could be the difference between life or death for a child. Just like today young adults would have weighed the cost and benefit of engaging in premarital sex. The cost would have been lower for women stuck at the bottom of the social economic scale, so they would have been more inclined to participate. To tip the scale against premarital sex, parents, churches, etc. socialized children to possess a set of sexual mores aimed at stigmatizing sex. Parents at the lower end of the social economic scale would have less incentive to engage in such practice. With the passage of time contraception become more efficient and the costs of premarital sex consequently declined. This changed the cost and benefit calculation for young adults so that they would be more likely to participate in sexual activity. It also reduced the need for socialization by parents, or the church and state, which would also spur promiscuity. This is an example of culture following technological progress.

I understand the time series argument, but the cross-section income argument is counter-intuitive. If we believe that the costs of raising children out of wedlock are higher for females than for males then those costs must be proportionality higher for females in lower socio-economic groups than for higher socio-economic groups. Sure the costs of socialising children are high but I don’t see why they would vary by parental income. Yet that is implied by the data.

So, for instance, in the bottom decile 70% of girls between the ages of 15 and 19 have experienced it, versus 47% in the top one. Similarly, 68% of adolescent girls whose family income lies in the upper quartile would feel “very upset” if they got pregnant, versus 46% of those whose family income is in the lower quartile.

I haven’t read through the model carefully so there might be an explanation for this in the paper, but nothing jumped out at me while skimming through it. It does seem, however, that both parents and societal institutions used to socialise children. If parents with a lower socioeconomic status economised on socialisation, then societal institutions such as the church would have substituted for this at some margin. One of the results in the paper suggests that as the costs of illegitimacy have fallen for religious institutions so they have engaged in less socialisation.

* Most notably Julia Gillard who has no children.
Update: The Age does some fact checking on the story and reckons its a beat-up.

In an interview with The Australian Women’s Weekly, one designed to present himself favourably to the voting public ahead of an election year, this is what Abbott had to say on the subject of pre-marital sex. ”It happens.”

”I think I would say to my daughters if they were to ask me this question … it is the greatest gift that you can give someone, the ultimate gift of giving and don’t give it to someone lightly, that’s what I would say.”

Leaving aside the Opposition Leader’s hackneyed ”gift” metaphor – an idea possibly lifted from a Mills and Boon romance novel where the hero’s name is Rock or Brutus – what is Abbott saying?

He’s saying don’t bang the first randy, pimple-faced adolescent you smooch at the school disco just because he insists he loves you. He’s saying think about it.

Isn’t this what many parents would advise their growing kids?

Possum does a nice analysis looking at the desire to ‘do something’ about climate change and support for the CPRS. He runs a series of regressions that tend to show a one to one relationship between support for the CPRS and the need to do something now. His sample sizes look a little small – but the relationship looks to be quite robust no matter how he slices and dices the problem. (For those who understand regression analysis, he is suggesting that the coefficient on the x variable in his analysis is not statistically significantly different from one. He doesn’t report standard errors but I’m happy to believe him. In a later analysis he finds it greater than one).

Long story short.

In a political nutshell – Labor is losing the ground war on generic global warming opinion in this country.

This has some pretty serious implications.

For a government to ever successfully act on carbon emissions, will require them to successfully counteract the denialists. This is something that the Rudd government has so far refused to do – no doubt, at least in part, because of the softness in the ALP vote they are picking up in both the 30-49 yr male demographic (primarily, but not isolated to non-capital cities) and their recent inroads into the over 50’s. Both of those cohorts are more likely to be climate change sceptics than any other.

But if a government, this government specifically, ever wishes to build a solid majority of democratic opinion behind any carbon abatement policy, they cannot afford to vacate the field of global warming public opinion like they have – we’ve seen how the dynamics of that plays out right here in this post.

They need to carry large majorities of people with them that believe global warming is a phenomenon that requires action. Support for carbon abatement policy, even a program as second rate as the proposed CPRS, is reliant upon the proportion of the population that accepts the weight of climate science evidence – even if vicariously.

The Coalition are getting slightly disproportionate political returns on their encouragement of scepticism – getting an increase of more than 1% disapproving of the CPRS for every 1% of the population they can convince on the political backchannels to become a climate change sceptic. A wink here to Bolt, a nudge there to Jones, a deliberate public outburst from a Coalition denialist every now and then (or in Barnyards case, 18 hours a day) is paying dividends,

As long as the government continues to allow this to go unchallenged, as long as they continue to vacate the field of the generic global warming debate, they will continue to find themselves on the wrong end of the change in public opinion metrics – making carbon abatement policy an increasingly dangerous political and electoral event.

The battle for climate change policy will not be won or lost on the public battlefield of the detail of carbon abatement policy, it will be won or lost on the size of the majority that believe in the weight of evidence of climate science. It will be won or lost on the numbers of people that the government can convince to believe in the data.

If you get one, the other follows like a loyal dog.

Well, okay that is a long story too. I agree that the government will need to get a majority to support its policy. In some sense, of course, that is always true. I also think there does need to be another debate; if we really believe AGW is a problem and it can be fixed by policy intervention, then what sort of policy is required? We have already seen that Ross Garnaut is abandoning the ETS that he championed and now supports some sort of tax.
(HT: Offsetting Behaviour)

Update: John Carroll has an op-ed in The Age today talking about the recent Climate debate and the politics of that debate.

The claims made about the science have been rash, asserting dogmatic certainty about human-induced warming when the reality is that the overall picture is quite unclear. This has now backfired, with the IPCC admitting mistakes in its 2007 report, and the East Anglia Climatic Research Unit, which the IPCC has drawn heavily upon, shown to have been, at the least, devious in the results it has made public.

There may be some link between the rashness of the global warming campaign and the haplessness of the politics that has followed. The best current bet is that, after Copenhagen, emission controls is dead as a serious international issue. And further, only some environmental disaster that can be convincingly linked to climate change will rekindle it. The ”sceptics” have won the politics.

He is probably right, but I would hope that sensible level-headed individuals would continue to research the AGW-hypothesis and follow more professional standards of behaviour. Afterall even if we don’t believe the AGW hypothesis, humans are still having some impact on the environment and understanding that impact is still an important issue.

Carroll makes an important point

Of course, the objective case for global warming is separate from the manner in which some of its proponents have publicised it. And, it should be judged on its own merits. Nevertheless, I must confess to being wary of causes that attract pseudo-religious enthusiasm and intellectual fanaticism.

This is a point that the AGW lobby have yet to understand.

Update II: Britian’s chief scientist is also backpeddling.

Professor Beddington said that climate scientists should be less hostile to sceptics who questioned man-made global warming. He condemned scientists who refused to publish the data underpinning their reports.

He said that public confidence in climate science would be improved if there were more openness about its uncertainties, even if that meant admitting that sceptics had been right on some hotly disputed issues.

Public confidence has taken a pounding; The Australian is running a poll on this.

This is the bit that everyone should note (emphasis added).

Professor Beddington said that particular caution was needed when communicating predictions about climate change made with the help of computer models. “It’s unchallengeable that CO2 traps heat and warms the Earth and that burning fossil fuels shoves billions of tonnes of CO2 into the atmosphere. But where you can get challenges is on the speed of change.

“When you get into large-scale climate modelling there are quite substantial uncertainties. On the rate of change and the local effects, there are uncertainties both in terms of empirical evidence and the climate models themselves.”

English translation: the science is not settled.

Just before the last election John Howard promised to spent $500,000 over four years on orangutans in Indonesia.

While some kids ask for a trip to a theme park or toys when they are approached by the Make a Wish Foundation, Daniel Clarke, 11, who suffers from cerebral palsy, wished for help for Southeast Asia’s endangered orangutans.

While the Make a Wish Foundation could not help him save the orangutans as it was an international cause, it organised a visit to the Wallabies dressing room in Sydney in May at which he met the Prime Minister.

Daniel made a strong impression on the Prime Minister with his concerns over the plight of orangutans in Indonesia.

“He really struck me as somebody who was quite passionate about this and I admired that commitment and his bravery,” Mr Howard said in an announcement on YouTube. “I said I’d have a look at whether the Government can help.”

Howard wasn’t re-elected and the new government wasn’t bound by the promise.

Environment Minister Peter Garrett has now introduced Daniel to the realities of politics. “Dear Daniel,” wrote Mr Garrett in a letter received on May 14. “I write in relation to the former government’s undertaking to the Australian Orang-utan Project to provide $200,000 in grant funding to support the work of the orang-utan units in Kalimantan, Indonesia.

“Unfortunately, there is no funding program available to support this activity.”

“I was sad, very sad,” said Daniel. “I would ask Mr Garrett: What is stopping you? Why isn’t the Australian Orang-utan Project receiving the money? Why won’t you honour John Howard’s promise to me?”

Well Kevin Rudd did say that the reckless spending had to stop. Mind you in May 2008 the government still had a budget surplus.

Fast forward to the present day. It turns out that the Rudd government gave a million dollar grant to TERI. Yes the same organsation headed by Rajendra Pachauri. You’ve got to wonder about priorities.

Pete Boettke from Coordination Problem, formerly The Austrian Economists, posts on the application of  research findings from Katrina and other disasters to Haiti. The bottom line is that recovery from disaster is just another example of development and the same rules apply.

Two of the lead researchers in this project were Russell Sobel of West Virginia University (a leading scholar in empirical public choice) and Emily Chamlee-Wright of Beloit College (a leading scholar of qualitative research in economic development).  I asked both if they would share what they thought were the main lessons from their study of Hurricane Katrina for how to deal with the tragedy in Haiti.

Russ Sobel replied: “Pete Leeson and I argue in our Katrina work that the role of government after a disaster is similar to their proper role in normal times.  Protect rights, create law and order, and let markets get to work in delivering and allocating goods and services. (emphasis added) The stories I’ve heard about the looting and lawlessness there, similar to Katrina, show how the government is failing to do it’s basic job yet again.  After Katrina not only did the government fail at this job, but then it also infringed on the market’s ability to work–a double whammy.”

Emily Chamily-Wright replied: “The theme we ought to hit is “what can outsiders do to tap the capacity of civil society?”. This advice is rather general and abstract, but that is part of the point. Official relief providers can extend their effectiveness by identifying community networks and leaders within those networks that can be the source of local knowledge, authority, and habits of association that can be pivotal to rescue operations, administration of relief and taking the first steps toward recovery.”

Phil Jones, in a now famous email, indicated that he intended to keep out of the IPCC report a paper that had been published in a peer-reviewed journal. This paper met all the requirements for inclusion but did not comply with Jones’ and the team’s world-view. Jones’ conduct and that of his associates is now subject to an University of East Anglia investigation and also a UK Parlimentary inquiry.

Employee of the century Syed ‘My job is not to point out mistakes’ Hasnain tells us, ‘you know the might of the IPCC‘. In this instance the IPCC was able to convert a cut and paste job from the internet, ‘misattribute’ the citation, into peer-reviewed literature. They didn’t do that once, they did it twice.

Poger Pielke Jr. now shows another problem with the IPCC and the meaning of peer-review. This time in the area of insurance. I have highlighted the problem with insurance before but now it can no longer be passed off as a mistake or some sort of misunderstanding. Pielke demonstrates that the IPCC has not followed its own proceedures and ignored reviewer comments that highlighted the problem.

The issue now in dispute relates the following graph produced in the IPCC report. This graph is apparently from a background paper presented at a conference in 2006.

That paper was not published by the IPCC deadline for inclusion, nor was it peer reviewed, nor did it include the graph shown above, nor did it strongly support the claims being made. But it was highlighted anyway.

That is pretty damning. When the paper was eventually published as a book chapter it stated

In sum, we found limited statistical evidence of an upward trend in normalized losses from 1970 through 2005 and insufficient evidence to claim a firm link between global warming and disaster losses.

How does Pielke summarise?

Contrary to its procedures the IPCC chose to emphasize a paper that was not peer reviewed to support claims that were contrary to all of the peer reviewed literature on this topic. The IPCC created (or had others create) a graph that appeared nowhere in the literature and was highly misleading. When the paper was eventually published several years later as a book chapter, it was revised in such a substantial fashion so as to eliminate unambiguously any basis for the claims that had been made by the IPCC justified by the earlier version of the paper.

The claims made by the IPCC about the relationship of disasters and climate change, expressed most clearly in the figure above, were not simply made in violation of IPCC procedures. The claims were not just wrong. The claims were based on knowledge that just doesn’t exist. Again, not good.

I was particularly taken by a comment made by one of the IPCC reviewers.

As reviewer for WG2 I have repeatedly (3 times) asked to put a clear statement in the SPM that is in line with the general literature, and underlying WG2 chapters. In my view, WG2 has not succeeded in adequately quoting and discussing all relevant recent papers that have come out on this topic — see above-mentioned chapters.

Initial drafts of the SPM had relatively nuanced statements such as: “Global economic losses from weather-related disasters have risen substantially since the 1970s. During the same period, global temperatures have risen and the magnitude of some extremes, such as the intensity of tropical cyclones, has increased. However, because of increases in exposed values …, the contribution of these weather-related trends to increased losses is at present not known.”

For unknown reasons, this statement (which seems to implicitly acknowledge Roger’s and the May 2006 workshop conclusion that societal factors dominate) was dropped from the final SPM. Now the SPM has no statement on the attribution of disaster losses, and we do not know what is the ‘consensus’ here.

The general question is whether this sort of wholesale misrepresentation is important. Yes it is. Looking at the CPRS White Paper we find this statement at page 2-13 (emphasis added).

Intense extreme weather events, which are expected to occur more frequently under climate change, will damage or compromise infrastructure, increase the costs of clean-up operations and increase insurance premiums:
• Drought has the potential to disrupt electricity generation capacity and affect the reliability of electricity supplies. Reduced water availability affects coal-fired power stations, which require water for cooling, and hydro-electric stations because of low storage dam levels. Prices in the National Electricity Market in 2007 were highly variable as a result of drought conditions in Australia.
• Drought threatens water security. Infrastructure projects to boost water supply will be costly. For example, to address current water supply problems in south-east Queensland, a $1.2 billion desalination plant is being constructed as a part of a $9 billion upgrade to the south-east Queensland water grid.
• Hailstorms lead to extensive property damage and insured losses. The 1999 Sydney hailstorm resulted in $1.7 billion insured losses and 500 people left homeless.
• Changes in the intensity and geographical distribution of cyclones will place additional infrastructure at risk. A 25 per cent increase in wind gust speed can lead to a dramatic increase in damage costs for buildings, largely because existing building or engineering standards have been exceeded (Figure 2.7).

Now we heard just this week that the CSIRO ‘has backed away from attributing a decade of drought in Tasmania to climate change, claiming ”the jury is still out” on the science.’ We also know that the wind damage argument is false and that the IPCC lied about that argument. As I asked before, will the Rudd government retract these false arguments and claims?

We now know that the 2007 IPCC Report is riddled with error and misrepresentation. These are not just the usual mistakes that creep into a document and project of this size. There is a systematic dishonesty in the IPCC Report.
(HT: dover_beach)
Update: CL points to the Times Online coverage of this story.

A few things caught my eye this morning.

1) The UK Parliament will have an inquiry into the ClimateGate affair.

The Independent Review will:
1. Examine the hacked e-mail exchanges, other relevant e-mail exchanges and any other information held at CRU to determine whether there is any evidence of the manipulation or suppression of data which is at odds with acceptable scientific practice and may therefore call into question any of the research outcomes.

2. Review CRU’s policies and practices for acquiring, assembling, subjecting to peer review and disseminating data and research findings, and their compliance or otherwise with best scientific practice.

3. Review CRU’s compliance or otherwise with the University’s policies and practices regarding requests under the Freedom of Information Act (‘the FOIA’) and the Environmental Information Regulations (‘the EIR’) for the release of data.

4. Review and make recommendations as to the appropriate management, governance and security structures for CRU and the security, integrity and release of the data it holds .

2) There is an interesting discussion of the climate v weather issue.

The difference is that one day’s temperature has little influence on a yearly mean — it is just one out of 365 other numbers that make up the average. One day’s temperature is thus weak evidence for or against any theory of climate.

But a slew of months with higher- or lower-than-average temperatures will push that yearly mean higher or lower. A season’s mean temperature is stronger evidence for or against any climate theory than is a day’s.

Back in the 1990s, when the yearly mean temperatures were increasing, this was touted as evidence for the man-made global warming — but those years’ temperatures also corroborated the Business-as-Usual theory. Which theory was better?

For the past decade, we have had a string of years with mostly decreasing temperatures. This is strong evidence against the man-made global warming theory, but pretty good testimony for the BUT. So far, the BUT theory is winning on points (there are other climate theories the BUT doesn’t beat). This doesn’t mean that BUT is true and that the man-made global warming theory is false, but it does suggest that this is so.

3) I’m sure we all remember the answer Oliver North gace when asked why he was shredding documents, “This was an office with a shredding machine” or something like that. Well this comment deserves the widest possible publicity (emphasis added).

Professor Hasnain, who was not involved in drafting the IPCC report, said that he noticed some of the mistakes when he first read the relevant section in 2008.

That was also the year he joined The Energy and Resources Institute (TERI) in Delhi, which is headed by Dr Pachauri.

He said he realised that the 2035 prediction was based on an interview he gave to the New Scientist magazine in 1999, although he blamed the journalist for assigning the actual date.

He said that he did not tell Dr Pachauri because he was not working for the IPCC and was busy with his own programmes at the time.

“I was keeping quiet as I was working here,” he said. “My job is not to point out mistakes. And you know the might of the IPCC. What about all the other glaciologists around the world who did not speak out?”

“My job is not to point out mistakes” – don’t you just love employees like this?

Now that Catallaxy Files seems to have settled in at the new server, I thought I’d bring you all up to speed on what has changed “under the hood” and what is yet to be done.
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