EEP100 - Lecture 25

Uploaded by calcommunitycontent on 03.12.2009

Hand them in, sit down; we've got to go. Everybody wants to go home for the
holidays. Alright, I'll be handing back your briefings and making some commentsÑ
extensive comments on the briefings. As you know, second briefings are due next
week, and we're going to follow a single blind protocol. I will talk about that as soon
as everybody gets in here so that fewer people miss it (over there). Homework
three is obviously due; congratulations, that's the last of your homeworks. You will
see questions that are similar on the final. We will put up the key as soon as we
check it, because we haven't done that yet. I will have office hours today at 12:30
after class. AndÉI'll talkÉI'm not sure about the wholeÉ extra credit thing. I put
that in an e-mail to you guys. I've got some interesting suggestions. Most
of them involve work by me, which is not what I want, so I'm not sure about how
to handle extra credit right now. There is some notion about getting an op-ed published
(that's a good thing). Going to the city council and making a presentation (that's
a good thing). That doesn't involve work on my part.
And obviously that sounds like a lot of work, but people that want extra credit
should be considering that it's a lot of work that they're going to be doing. So,
continue to give me good ideas about extra credit if you feel like you want to help
your fellow students, or if you personally want extra credit. I don't just give it out
like candy. If I could sell it, then that would be nice and efficient, but we're not
that efficient.
Any open questions? Anybody? Stuff on their mind?
When is Briefing 2 peer grading due? The peer grading of Briefing 2 will be due
a week after the hand-in. So you are going to hand in your briefing 2 next Tuesday, and
it'll be due on the last day of class on Tuesday the 8th.
We still have class on the 8th? We still have class on the 8th. There is no
new material in class on the 8th. I'll be talking about the stuff that you guys do in
discussion section. The week of December 1st.
There is no discussion section this week; you already know that. There are
discussion sections next week after Thanksgiving. And we are going to be doing
more games in discussion section. I believe there are points on the table in terms of
course grade, so you might want to show up to discussion section. And if you do
well, you will get some points added to your course grade.
Other questions? Alright, let me wrap up some more stuff on
benefit cost analysis. Last week I mentionedÉthis is just a little bit of review
stuffÉbut we want to keep stuff in current dollars. That's why we have this whole
thing called a discount rate. We had the discussion about a financial discount
rate and a social discount rate. I just made up those letters there. That is not industry
wide jargon. But you know what I mean by financial versus social.
We want to make sure that they are in current dollars (or net present value for
people who have heard that before). Secondly, there is a huge difference between
willingness to pay versus willingness to accept. And there's that notion of cheap
talk. Benefit cost analysis turns to be super important
in policy work. And it's also very political, and it's also very manipulated.
And I will get a little bit more into the manipulation of benefit cost analysis with
respect to things like building dams when I will get in number 5. My good ideas.
Value of a statistical life? Who remembers what that is? More or less. Ball park
figure. What's a life worth? 7 million?
Yeah, 7 million, more or less. Value of a statistical life. This goes into
benefit cost analysis. Approximately, your life is worth 7 million dollars if you are
a valuable American. If you're an Indian, obviously it's less, according to Americans.
And we'll get into that dodgy little question when we get to climate change.
Is the statistical value for some peopleÉlet's say you are a neuroscientist who has
years of education, compared to other people who areÉ
Are you being sexist by saying scientists are men? So that's a good question. Let's
take a little excursion on VSL for a second. First of all, I don't know if I told you how
it's calculated. Did I tell you that? How it's calculated?
So what they do, basically, is they look and they say (theyÉthese scientistsÉthese
statisticians, really) what they do is they look at someone, and they go at a kind of
a risk reward axis here. So let's call this
reward, as in your salary. And let's put this as
risk (As in the likelihood that you're going to die).
And if you are, for example, a post doc teaching at Berkeley then you're going to get
a salary that's here and a risk of dying that's here.
If you're a professor who's at Berkeley then you're going to have a salary of here and
a risk that's even less because you don't talk to students. That's a joke. Bad joke,
okay. So what they do isÉyou get these office workers
type of stuffÉvery low riskÉbut then you start getting intoÉwell what about
if we have a coal miner who's out thereÉhas a risk of death because the mine
might collapse, and they might be making post doc salary, but the same person
in terms of human capitalÉyou guys have heard that before? You're here for human
capital? Education? So that very same person (this is they key)Énot
that you have a post doc or you're a professorÉbut this same person might be able
to take a lower paid, less risky job working at the video store, renting stuff.
You have a high school education, you can shovel coal or you can rent movies. So there's
this kind of tradeoff here essentially between risk and reward. And if you look at
enough professions, you get, you knowÉany profession that you haveÉif you
work at a machine shop, or you work as an airline pilot, or you work asÉand actually
I think the military gets excluded because the risk of death is part of a different
type of occupational hazard. They look at the tradeoff between these two
things and they basically say, "Well, how much are people willing to trade money
for death, voluntarily in a market?" So this doesn't work in a totalitarian society,
does not work with the Gulag with the slave camps, but it does work with free market
societies where people with a certain level of human capital are able to take a
job with a certain tradeoff between risk and reward.
And when you are calculating this, you basically can find outÉif this is the risk of
death, and you just take that line out to 100% chance of dying, then you get a
number. Which is equivalent to a professor's salary. No. which is equivalent to 7
million dollars. Something like that. That's how they figure out this VSL.
But that is I value the deathÉ Given that line.
Given the line, and I arrive at 7 million dollars, then wouldn't that logically mean
that I could have somebody pay me $7 million to kill
myself? You can't spend the moneyÑsucks. But this
is in a sense, because it's yourÉit's not how much you will be willing to be paid to
die in a directÉlikeÉplease shoot me. But you're taking that risk. So statistically
speakingÉyou are taking a highÉit's taking statistics and kind of stretching the
definition, right? So statisticallyÉlook at it this way. If
you have a 1 in a 100Ésay that your current job, you have a 1 in a 1000 chance of dying,
and you're willing to take a different job for a higher pay, which has 1/100 chance of
dying. You personally go to work everydayÉyou're not thinking, "I'm going
to die today." Right? but there is going to be a higher salary attached to thatÑat least
in your mind and in the market in terms of wages, right?
So in that sense, it'sÉlet's call it equilibrium. You're willing to take that kind of
chance but you're notÉIt's just being paid enough so that you have a statistical
chance of dyingÑnot that you're going to be dead for sure.
So why do they take 7 million and not half of that? Why do they take the highest cost
of the value, but not the average? Oh no, but this is kind of an averageÉif
you actually did this for a professor and say,
"How much are you willing to pay to take a deadly professor job?" then it would be
like $7 million because I'm so valuable. That's what everybodyÉ
In a sense, yeah. Mostly, these are calculated against blue collar jobs, usually. Blue
collar meaning you touch things that are dangerous (not paperÉpaper cut deathÉ).
So is it the department of labor that calculates this?
It'sÉthe EPA has the number because the EPA uses it for environmental damages
and the risk of dying from toxic exposures and stuff like that. I don't know. It could
be the bureau of labor that does the statisticsÉit could be somebodyÉsomebody
does it. In fact, there's arguments over who's VSL is better. And every country will
have their own statistical division doing this calculation. The U.S. number tends to
be 7 million. And thenÉyou haveÉalsoÉas part of this
calculation isÉDALYÉwho remembers what that stands for? I can't remember the
definition right now. It'sÉmaybe I'm using the wrong acronymÉbut the idea is how
many more years of life do you to liveÉif you die of this thing, how many years
of life do you lose? And this comes into the debate about AIDs vs. Cancer. Because
your average cancer death occurs atÉlet's just say 65, and your average AIDs
death (let's just say) occurs at age 35. Are those the same deaths from a statisticalÉfrom
a social perspective? No. Let's just say you have an average life expectancy
of 85. If you make it to 35, 85 is in the ball park. So basically, you are losing 50
years versus losing 20 years. And this is what people pay attention to in terms ofÉif
you have a certain limited budget in terms of you public health budget, and you
need to figure out where to spend the money, do you want to spend it on curing AIDs
or curing cancer? It's the same concept as triage in the operations room of
a battlefield hospital. When you come in off the battlefield and you lost a leg and
the other guy lost his head, the doctor's like,
"The head guy is dead. I'm going to work on the leg guy."
Or leg guy versus stomach injury. Stomach injuryÑwell whatever. Leg guyÑI
should make sure he doesn't bleed to death. When you have a doctor in the
battlefield making triage decisions, that's literally saying: that person is going to
die for sure. That person might die, that one
I should probably save; if I don't, they'll die.
And they literally decide life and death. That's what Triage really means. This is a
form of public health triage, which isÑwhere do we put our budget? Should we put
it into cancer research where we might save 20 years of every life of somebody we
cure from cancer? Or AIDs, where we save 50 years of life? That's only on the
benefit side. Remember the cost side. Condoms compared to crazy cancer
treatments. Cancer treatments are extremely expensive and it only gives you 20
years. Condoms are whateverÉabstinence only (according to some people) is worth
50 years. So the cost benefit on AIDs health prevention is insanely high compared to
cancer work. And that, in some ways, is one of the reasons
why a whole bunch of money has been pushed at aidsÉexcept, there's the whole
PR, political pressure thing from the AIDs group that started in the 80s in San Francisco,
and then cancer groups come in, and you have all these band bracelets and stuff
like that. So all of theseÉthis kind of debate over
(I don't know if it's DALY or not) Éthis kind
of debate over what a life is worth goes into the public policy debate on where
should we put our money. If you're an individual, or even if you're Bill
GatesÉnoÉthat's not right. Think ofÉthere's a couple of celebrities
out there who have autistic kids, and they've been really pushing for the debate between
vaccination and autismÉhas anybody heard of that? LikeÉif you vaccinate my kid,
they'll get autism. And there's a huge argument in public health peopleÉbecause
they're basically say it's correlation versus causation. Let's just put that aside
for a second. We do know that when you have a celebrity spokesperson for your particular
affliction, you're going to get publicity and money Éif it's not even the
celebrity's money. So the whole back and forth of PR and advertising, essentially,
is how money also gets allocated. If Angelina Jolise shows up at the US Senate
and says, "SenatorÉ" (sits on the guy's lapÉ) "I need some money for saving people"Éthat
budget appropriation is showing up, right? That's how she persuades. The other
girlÉthe spicy girlÉshe's the UN Ambassador for somethingÉfor public health
or something like thatÉshe's out there visiting ministers, and she's like, "I'm a
Spice Girl, pay attention to me." And they do.
You know. See what I'm saying? Does that make sense? Do you see that ever, in the
media? That pattern? Hi, I'm an anonymous person on the street.
I want you to give money for whateverÉthat doesn't happen. It's celebrities
that push these thingsÉthe same ways celebrities get involved in war debates
and stuff like that. So the thing isÑ there's some science going on in terms of
this public health thing. It's also getting pushed back and forth in terms of politics
and celebrities and stuff like that. So that's what isÉall the other stuff is going
into benefit/cost analysis, which isÉ Basically, benefit/cost analysis isÉif your
benefit over your cost isÉwhich one? Do I want greater or less than one?
Greater Greater than oneÉthen it's a good idea. But
what if I have a benefit/costÉI've got a benefit/cost of project one is equal to 1.5,
and I've got benefit/cost of project two is equal to 2.5; which one should I do?
Two. Okay. But then Tom Cruise says, "This is important."
And guess what happens? That will get done more often that not. And
this mattersÉnot more often than notÉbut quite more often than you want. This
matters because there's a limited budget for expenditures. So this project will
get done; this project will not. So you guysÑwhen you're doing your analysisÉif
you're actually using the economics, you want to be able to say, "This is what we should
be doing; celebrities are not." No celebritiesÉTom Cruise can come in and
say, "Yo, Tom, if you fund half of this cause, then we can get the B/C up to 2.5,
and then everybody's happy." But Tom is going to be sayingÉhe's like,
"Oh no, sorryÉI have to take my money elsewhere."
So there's a notion of cheap talk from people that are pushing their own pet
projects. Cheap talk in a sense ofÉare you putting your money where your mouth is?
Or are you just sitting thereÉyou're willing to do a PSA, but you're not willing to put
$5 million down. Is that an "e" or a "c"?
This is a c. Benefit over cost. What is WTP?
Willingness to pay. How much are you willing to pay me so I don't kill the whale. Or
how much are you willing to accept if I get to kill the whale. How much do I pay you
to kill the whale? So these numbers are different. Which number is different when
you ask people these two numbers? Willingness to accept. People are always saying,
"You want to kill the whale? A million dollars."
How much am I willing to pay to save the whale? I don't knowÉI have like $20.
That's what happens. NowÉone other thing about benefit/cost analysisÉnotice:
numbers, numbers, numbers. Most people are like, "Wait, you can't put the value on
a life!" Right? You can't put a value on a sunset, you can't put a value on a clean
environmentÉour children's future. Or you can't put a value on how nice it feels to
recycle. So there's a quantified (which is the dollar stuff) versus qualified.
So you have quantified costs and benefits versus qualified costs and benefits. It's
stuffÉyou have a notion that it is good, but it is a more subjective value.
This is more subjective, and this is more objective. And you do want to include
subjective costs and benefits in our analysis. If you're doing an analysis, you're going
to sit there and you're going to do a benefit and a costÉand you're going to have $1
and -$1. And you're going to have a lifeÉ So remember the baby seat thing? You'll save
one (the baby seats on airplanes) baby life by putting a seat on the airplane, and
you'll lose 1.5 baby lives because people who do not take the airplane take the car,
and then die in the car accident, and their babies die.
Someone did that analysisÉlike holy cow, this is actually really a bad idea. So you
have 1 life versus 1.5 lives. You understandÉyou can qualifyÉyou can quantify
those. But what if you have this versus that? What
the hell does that mean? You have to include it, though, in your analysis, thoughÉat
least so you put it on the table, and you can even let peopleÉif you're doing decision
making, and you're trying to get a decision maker to make a decision, you say,
"LookÉyou have to figure out what the value of a sunset isÉor a happy voter or
whatever." You define/assign your own subjective values
to this. And then you give them the spreadsheet and say, "You can play with the
numbers." But if the subjective value of happiness,
or a happy voter, is $200, and that's way higher than you reallyÉin order to flip over
the benefit/costÉdoes that make sense (what I'm talking about?)
They have a spreadsheet. Let's say it this way: let's say that the benefit is 10 and
the cost is 10. And thenÉso they're even. They're
not sure if they should do the project (the decision maker), okay?
And there's this kind of a loose thing going on here. What the hell is this? And the
politician says, "You know, that's worth about $10 to me."
But the cost is like $15. Then that politician is assigning his own subjective values
on these columns here and that flips the benefit/cost against the project. Do you
see? And that is what happens. But at least you're making it more explicitÑwhat
information is being used to make the decision. The fact that there's subjective
value being put inÉthere's nothing you can do about that; people are just like that.
If you sit there and say a church versus a mosque, you're going to have completely
different opinions about what should go here. And you're work as an analyst is not
to assign values on that. What about situations whereÉon the benefit
sideÉthe benefit is made up ofÉfor exampleÉwe're building a bridge. The cost
associated with that is the taxpayer's cost, and then there's one construction company,
and they get the huge chunk of benefit out of it, and everybody else gets a little bit
of benefit out of itÉ Do you mean the cost? They get the contract
from building the bridge. Right, so they getÉto them it's a benefit
though. No, but if you're the decision maker, you're
only looking at the cost to construction. That'sÉwho cares where that money goes. That's
the cost to society versus the benefit to society.
So you don't take individual benefit from that into yourÉ
Well, if it's a cost to society that goes to a benefit of the individual, then you just
keep that clear. When you're doing benefit cost
analysis, spending money
on a bridge does not become a benefit to society.
Right. It doesn't become a benefit for society. It may be driving across that bridge is
the benefit. That's right, yeah.
So that one construction company does not go into the benefit analysis.
Not unless they enjoy driving across bridges. Okay.
Yeah? Don't new deal programsÉdidn't those depend
on the costs actually being a benefit to society? You give people jobsÉ
Right, so the other thing is what you were talking about beforeÉjust like a transfer
of wealth. If you give me $10, society is not better off. But if you're doing a cost
benefit, you're looking at a project. Should we do this project given I have a limited
budget. When you talk about the new deal, it was essentiallyÉ and what people are
talking about right now with the stimulus. Let's spend $800 billion to make everybodyÉwe'll
borrow it from ourselves, we'll spend it, and make everybody better off by
building bridges and stuff like that. So there was some notion ofÉwe should spend
our own money to put ourselves to work, so that we feel good, so that we can
have enough happiness to pay back our own money. Some kind ofÉit's like lifting
yourself up by your own bootstraps. But that was based on the whole idea of needing
to stimulate aggregate demand. That's the whole Keynsian debate. I don't know what
to tell you. The stimulus, from a public policy perspectiveÉthe benefit/cost
from the stimulus has turned out to be tragically small. The benefit.
If you've seen the numbersÉI've been putting some numbers up on my blogÉ$700
thousand per job, whichÉdude I'll work for $700 grand. I'll dig holes. The problem
is even worse; they've actually been makingÉthe jobs have been made upÑa lot of
them. This guy sold 5 pairs of boots to workers
(construction jobs), and he was getting credit for creating five jobs. And there's
been a lot of really bad examples. The 9th congressional district in ArizonaÉthey received
$750 thousand of stimulus money, but there is no 9th congressional district
in ArizonaÉit doesn't exist. And someone pointed this out saying, "Well,
I found this on the website about government transparency," but that's the point.
Government transparency is that you see that there is no congressional district.
Because in the old days, you'd just start sending out money, and someone would
say, "Yeah, I'm from the 9th congressional district." And someone's like,
"Sure, go ahead; there's a lot of you guys." SoÉ700 grandÉthat's a lot of money
to steal if it was stolen. But they got caught, in a way.
So the whole stimulus money thing is kind of like hocus pocus stuff, as far as I'm
concerned. Different long debateÉlet's not talk about
that right now. Other questions? Di you have a question still? Any other questions
on the BCA stuff? I'm going to go to the next topic. Yeah? Okay.
Climate change. Okay, yeah, talk about not controversial. Let me say just a few
thing. The Copenhagen Summit is happening somewhere near in the future in this
place called Denmark, which is one of the super green places in the world. I think
one of the highest rates of bicycle riding in the world. And the car ownershipÉthe
car taxÉI think it's like a 200 percent tax on purchasing a new carÉso if you buy a
new car, instead of paying 20,000 dollars here, you'd pay like 60,000 dollars in
Denmark. For some reason they don't buy a lot of cars.
Now, they're going there as a notion of updating on Kyoto, and I don't know very
much, but the whole idea is that we need a worldwide agreement on what to do
about climate change, which is pretty damn hard. It's a big collective action
problem. That's the stuff you guys have been thinking about and talking about and
all that stuff. So that's just happening. That's the thing that you guys should watch
in the news. It'll happen I think in the nextÉdoes anybody know the date?
LikeÉDecember something? 7th to the 12th
7th to the 12th. My prediction is that they will have a communiquŽ come out after it
where everybody is very worried about climate change, and they all promise to do
something, and then we'll see you in 5 years. So nothing will happen. The US, of
course, from a political perspective, has not gotten anything together in terms of
action on climate change. They might be forgiven if Obama gives a nice speech.
That'll be good. And the big deal, though, is that in a collective action problemÉif
you're going to cooperate in a public goods game, the people you are playing
withÉyou want them to show up and play fair. You don't want them to defect. From
a policy perspective, the US has been defecting from climate change negotiations
ever since Kyoto happened. We're not going to do it; you guys go ahead. Take care
of the planet. We don't need it. We've gotÉwe want to drive our SUVs around. So
that has been a huge impediment. Europeans, of course, set up their own carbon
trading and cap and trade. It's kind of had little bumps in the road, but it's way more
than we got; we're still debating cap and trade. Let alone all the disasters on that,
which I'll get to in a secondÉUS disasters on cap and trade.
So if the US shows up, makes the right noises, that could help in terms of pushing
along global negotiations over climate change. As I mentioned earlier in the class: it
is the world's biggest collective action problem. It could be the end of the world
collective action problem, as far as we're concerned. As everybody knows, the earth
will continue whether or not we are here. The big two players are the so-called G2:
China and the US. The US, of course, is historically the biggest emitter of pollution
in the world. ChinaÑI think if they haven't passed the US, they will pass the
US quite soon (obviously on a per-capita basis China's only at _ of US emissions).
But they want to have an American lifestyle, right? so that means big cars,
big houses, lots of plasticÉactually the Chinese like plastic more than us, as far
as I know. I love going to China. You get a
bottle of water. It's not just a bottle of water. It's a bottle of water in a plastic
bag with a plastic straw. And you tear out the
bag, throw that away, tear out the bag around the straw, throw that away, put the
straw in the plastic bottle, drink the liter of water, and throw that away.
So that's kind of like a conspicuous consumption. I have enough money nowÉif you
go to poor places in the worldÉthe poorest places in the world have no garbage, at
all. EverythingÉit's not that they only deal with natural materialsÉeverything gets
used until it disintegrates. A glass bottle, a plastic bottle, a T-shirtÉyou see people
wearing T-shirtsÉthe holes are bigger than the shirt, but they will wear that stuff.
Very poor people do not throw anything away. When they get wealthy enough to
start throwing stuff away, they do. They like it.
I went to Albania in the 90s. They just got out from one of the worst dictatorships in
world history. They loved littering. It was so great. They were free. In the old days,
they'd go to jail for dropping stuff on the ground. And that was their kind of
freedom. They just throw crap on the ground. So there's a bit of a problem there in
terms of us (the Americans, let's say) going around saying, "No, no you guys can't
pollute, you can't have carbon, you can't throw plastic on the ground because it's
bad." And they're like, "Whoa, we have to enjoy
ourselves. You guys just did it for 50 or 100 years."
So that'sÉthere's actually a push and a shove back and forth.
The Americans wrecked the world, the Europeans did a little but, but the Americans
wrecked the world, and now we're saying to everybody else: "No, we shouldn't do it.
We ruined it for you. You should be virtuous now."
So there are these moral arguments. The Indians and the Chinese agree on this
stuffÑyou get your whole line of developing countries.
So what's going to end up happening, of course, is: who's going to pay for it? Climate
change is not going to be free. The first thing you're going to have to consider is
that everybody (and this isÉI don't know why this
is such an open secretÉ) but everybody has to use less. Our lifestyles,
Americans especially, are going to have to go to a lower consumption. Full stop. Not
bamboo pants and organic sushiÉno sushi. Only 4 pairs of pants, not 12 pairs
of pants. That's the kind of stuff that everybody's like, "Oh my god, I can't handle
that." And they don't want to handle it. SoÉnumber one, top line consumption is going
to have to fall if any of this stuff is going to happen in terms of climate change.
And number two: somebody is going to have to pay to either clean up existing
technology, develop new technology, or clean up the environmentÉthat
ideaÉgeoengineering? The idea in super freakonomicsÑcomplete disaster. That's
my summary statement on that. I can talk about that later if you guys want to know
more. SoÉhere's an interesting statistic. You've
gotÉsay you want to do a global regime of cap and trade on climate. Let's say that the
average output per capitaÉwe don't even care what it is, but let's say it'sÉwhat
we want is we want an average output per capita of 1000 tons per year of CO2 equivalent.
Methane gas is much moreÉ1 ton of methane is worth likeÉ20 or 30 tons of CO2.
Something like that. Big number. So we talked about CO2 eÑequivalents. Let's
just sayÉit's 1000 tons CO2 equivalent per capita. And that's where we
want worldwide. We've got 6.5 billion people. This is just for the sake of argument.
I don't think 1000 is right. So if we're having that per capita output,
and it's a global cap and trade, and the average American is usingÉI wouldn't be surprised
if it was 4 times that number. And then let's say that the averageÉlet's
just say for the sake of exampleÉthe average Indian or Chinese is using 500 tons
per year per capita. If you're going to do cap and trade, what
does this imply? If you have 500 then you kind of have an advantage?
If you have 500 then you have an advantage? You would be able to sell the credits.
Right, let's start with that. If everybody is supposed to use 1000, then every human
on the planet gets a permit for 1000. If you're only using 500, you can sell it. If
you're using 4000 you have to buy it. And I would not be surprised if it's some kind
of numberÉremember that the price (I just made up that number here, but let's just
say that that's true for a second) the price in Europe right now is about 20 Euros a
ton for carbon. The USÉthey're throwing around pricesÉ10, 30, 40
bucksÉwhatever. Let's just say it's $20. Say the average American
gets a permit for $1000. It has to go buy 3000 tons of permits. That's a very messy
20. That means the average American has to pay
$60,000 to the folks elsewhere on the world. Now, that's a big number. Let's say
it's even $5000. Anybody? Volunteers? You want to pay $5000?
If you're actually from China, and you're living in America, bad news. You're living
the American lifestyle. You want to pay $5000? No. So are we going to do well with
our climate change negotiations? Basically it's like fuck it; I don't careÉit
costs too much. I'd rather see the world die. That's it. That has been the US negotiating
position for the last 10 years. If you want to be depressed, this is a good
topic. This is completely unavoidable truth as far as what has to happen. We don't
get free lunch. If it was free, we wouldn't have a climate change problem. We
would live in a post-carbon society. We wouldn't be using coal.
We'd have fusion-powered reactors in our pockets. We'd just plug it into the car and
the car would drive away. But we don't. We're not Buck Rodgers in Star Trek, right?
So the problem with climate change is money. That's it. We like our lifestyles, and
we don't want to pay for it. And everybody is going to Copenhagen to argue
over who is going to pay for it. And no one wants to pay for it. It's the same
thing as the stimulus. Let's just borrow from ourselves and stimulate ourselves, and
then we'll all be rich again. It's the same thing as the water negotiation
that I ranted about a couple weeks ago. Let's just take $11 billion that we don't
have and pass a bunch of laws that aren't going to do anything, and congratulate ourselves.
Complete failure. That's the debate that's been going on with climate change for a
long time. Couldn't it be that there are someÉI meanÉthis
cap and trade agreementÉwe can't really rely on laws that somehow could control
everybody and manage everybody's consumptionÉoh, red light, you went over
1000, pay somebody...I mean you could alsoÉbut what about people who have intrinsic
motivation to just do less. Couldn't that be another strategy to try to get more
people to do thatÉby themselvesÉ Yes. So, in my blog, I have a tag. I call
it 2080. The 2080 rule. And I just made up this jargon. And what I say in water is that
20% of people actually want to use less water energyÉsave the earth, whatever. They
take short showers, they contribute to green peace and all that stuff. 80% of
the people don't care. It might be more like 5/95. But some people really do care. They
usually live in Berkeley. If you go out into the Central ValleyÉI mean
I saw some of the people who were being interviewed on a conservative television
network about a conservative topic. And they were not Berkeley people. They were
like, "Who are you to tell me what I can drive or shoot or eat?" there's a big
debate. The wholeÉthe vegetarians are up in arms
saying, "Hey, what's up? We've been ahead of you guys for decades, centuries."
And the meat eaters are like, "I like beef." So 20% of people really do care, and if the
rest of the world was full of those 20%, or 10%, then we wouldn't have this problem. Because
it'd be Gandhi. Remember GandhiÉhe saidÉwe should all live in villages,
and make our own cloth, and be a little community, and that's good enough for
me. I'm happy. And the rest of India is likeÉcell phones, rickshawsÉyou knowÉall
that stuff. But at the same timeÉif you take the exampleÉsmokingÉyears
ago, everybody smoked. If you told somebody, "You can't smoke
in this train station." They're going to look at you and say, "What do you mean? I'm
going to smoke." So I meanÉsocieties are able to adapt and shift forward. So couldn't
it be possibleÉmaybe through this whole debate, in 20 yearsÉit might take more
than thatÉbut in 20 years more people will realizeÉ
Yeah, so that's the second half of the 20/80 rule. 20% of the people really care. 80%
of the people don't care. But if you charge them, they'll change. You have to charge
them. You have to make it illegal, which is a sense of a charge. I'll tell youÉthe big
problem in climate change isÉI don't call it global warming; I call it local warming.
Because who really does care if Bangladesh goes under water. It's only 150 million
people. But if the ski season shuts down, whoa. That is a big problem. If you want
to convince people in the Bay Area that global warming is a problem, talk about the
ski season. Don't talk about Bangladesh. Make it local so they pay attention. You're
children will die. My children? Oh, well that's important. You see?
So given the costs, each individual person will have to pay for this cap and trade
systemÉwhat ifÉinstead of having them pay for their carbon emissions, you let them
do whatever they're doing right now, and take likeÉhalf of the money that would be
required to do that and invest it in subsidizing solar energy or subsidizing nuclear
power generatorsÉand it won't solve the problem now, but likeÉin 20 years, we have
our fusion generator pocket thingÉthen the problem will be gone.
Yeah, that's in a sense what I was talking about in terms ofÉyou buy your pollution.
And that money has to go somewhere. Right. But what if that's more money than
we needÉhow much money would it be? The market price forÉusing your numbers...there's
only 300 million people using the 4000 and the rest of the worldÉit's 500 to
buy, so the price for the permits is probably going to be relatively high, right? And you
estimated like 6000 dollars. So 300 million times 6000 dollars isÉ
A lot of money. It's more money than we probably needÉand
I don't think there's that much moneyÉI meanÉif you askÉ
So, regardless of the amount of money, what would you do with it?
Reinvest it into science. Yeah, but that's part of the debate.
I'm just sayingÉI mean that's an alternative solution
But it's not necessarily a solution. It's an example.
Right, but it'sÉso the idea isÉwhere would the money go? Part of the money might
go into buying permits from the Indians and Chinese. The other part of the money
might be going into technology, right? But noticeÉthe wholeÉeverybody's in DC
going, "Yeah, we're going to save the world. Give us money."
The auto industry: stimulate us; we'll make green cars. Did anybody see the
Chrysler move? Chrysler was not onlyÉit went bankrupt, then it got bought by a
private company, then they got bailed out by the government, and theyÉnumber
one on their list of things to do was: green car. They got $10 billion, and the
cancelled the green car program. Remember sunk costs are sunk? They got the
politicians to put the money on the table, then they got the money. Screw the
politicians. They don't want to do that. Doesn't pass the BC test. We want to sell
SUVs. We make more money from SUVs than we do from electric cars. Those are
worthless for companies. So there's a lot of people out there saying,
"Stimulate us, and we'll save the world with your money."
Like when we needed a cure for polio. We gave a bunch of money to the scientists.
We didn't say, "Oh, thanks for the money." And likeÉleft. There are people who
would take the money and actually put it forward to solve the problem. And so I'm
not suggesting that we give all our money to car companies. But there's plenty of
scientists whoÉat this University, for example, who would work on making real
solutions to our problems for a lot less money than it would cost.
That's right. But the whole wall of money that's moving around on climate stuff
right nowÉor the potential moneyÉthat's why the negotiations are very tight,
because there's so much money at stake. Forget healthcare. This is crazy money.
World wide trillions. So the political debate, essentially, is who's going to get that
money. Who's going to pay it, and who's going to get it. And you're talking about a
piece of that action. I completely agree that that's important. The idea that
innovation and competition and stuff like that can help us solve this problem is
another thing. But I will tell you that my top line comment (we have to use less) is
standing, no matter what the technology. I think another good way to do what he was
talking about, partially with solar panels, is that they're really, really expensive to
install, but if you can afford them, the government gives you incentives to do so.
And so the people that can afford them pay for them and get them and get the incentive.
And that money goes back into developing more cost effectiveÉ
Right, the idea of subsidizing a good technology. There's actuallyÉthere's a slightly more
clever way of doing that. So instead of taking a solar panel array, which might cost
$15 thousand dollars, and subsidizing it for 10 thousand dollarsÉI meanÉthere's some
really big subsidies being thrown at solar.
One of the innovations is to put a loan on the house that stays with the solar panels.
So if you sell the house, then whoever's paying offÉit's a type of debtÉlike a street
improvementÉthis kind of debtÉand then the house is worth more because it has
solar on it. And the debt of paying for the solar gets paid over how many years. 30
years or whatever. So that's a different story. Doesn't Chicago have a local cap and trade
system? There's a lot of cap and trade stuff being
tried out. There's a Regional Greenhouse Gas InitiativeÑRGGI up in the Northeast of
the US. There's a Western Climate Change InitiativeÑit
involves California, some western states, and Canadian states. A lot of observersÉstates
that are checking it out. There's actually a carbon tax in the Bay Area.
Did you guys know that? There's a carbon tax already. It's 4 pennies per tonÉnot
very big. But on the other hand, all you have to do is crank it up and collect
all that money. They have the accounting system in place.
Number one: they got it to go into place. Number two: they got it working. And that
is actually the biggest two problemsÉthe big barriers to a carbon tax. And they just
crank it up from 4 pennies to 4 dollars or 40 dollars, and the Bay Area would
suddenly have a carbon tax that was working and binding. A constraint.
I was going to ask a questionÉI don't know if it's off topicÉ
Everything's off topic. There's a lot of debate about the cap and
trade and like howÉputting it on a carbon taxÉthe first carbon tax was on the sulfur,
right? The acid rainsÉand that was easy to monitor and easy toÉbasicallyÉeasy to implement
that system on sulfur because it's easier to monitor. But they're saying carbonÉit's
too wide, and there's too many sources, too many outlets, so it's going to
be too difficult to actually implement itÉ Is that your question?
I was just going to ask you if it'sÉ Is that hard? Or is it efficient? YeahÉthe
question is, essentially: can we monitor carbon sufficiently to do cap and trade or
tax it, for that matter? And the short answer is yes, we can do it. It's a lot more
work than doing sulfur dioxide because sulfur dioxideÉthe SO2 emissions were being
monitored at 2 or 3 hundred different sourcesÑmostly power plants in the Northeast.
And carbon emissionsÉyou knowÉevery car that burns gasolineÉit's
likeÉwell wait a secondÉbut you can taxÉ Because carbon doesn't get transformed even
when you refine itÉyou can tax petroleum at the port of entry or theÉwhatever
refuge you're pumping it out ofÉor shoreline. So you can tax carbon upstream.
You don't want to tax it downstream. I meanÉthis is actually kind of a scare tactic
by peopleÉevery time you turn around, you have to pay a carbon tax on a candy bar.
It's likeÉyou will, but that carbon tax is imbedded in the cost of the candy bar. The
same way thatÉmuch more so than sales taxÉbut in the same way that the gasoline
goes into theÉthe diesel that goes into the tractor that grows the corn for your Coca
Cola corn syrup is already imbedded. So it just passes through the system. That's
not a problem. Getting the political agreement on it is.
Yeah? Who is paying the carbon tax now?
Who is paying the carbon tax now? Well, we do. Consumers pay carbon taxes. The
little four cent one in the Bay Area? Yeah, we're paying it.
Everywhere? Everywhere in the Bay Area, yeah. But it's
very small. So the Chevron refinery up in Richmond pays the mostÉtotal. They pay $300,000
a year in taxes. That's likeÉthey spend that on paint. Right? Or
on hats. So that's nothing for them. So it gets passed through. Did you notice? Has your
lifestyle declined? No. No biggie. But the carbon tax has to be big enoughÉyou
want price to be big enough to affect what you're doing.
People are likeÉIf you buy a bottle, and you pay a 5 cent deposit, and you throw it
in the ocean, and you kill a turtle, the 5 cent
deposit hasn't done anything. The price has to be high enough to get your attention.
That's the bad news. Everybody's sitting there going, "We're going to have
cap and trade, carbon tax, and prices won't go up."
Whoa, hold on. There's a complete failure of logic in that statement. The price of
energy has to go up, and you will use less. That is a goal. Anybody who says
differently is likeÉselling garbage. Bullshit. With smoking and the ozone layer issueÉit
was a fear thingÉso people were really, really scared.
Smoking was secondary smoke problem. So people were afraid of getting cancer
from smokers. Yeah, and with the ozone, they didn't want
to get cancerÉskin cancer. Yup, the Australians especially.
Yeah, so do you think the fix for public awareness would be to scare the crap out of
people, and say that they're going to die ofÉ
Well that's the thing. Some people say that Al Gore is just out there scaring people,
and there's nothing really happening. And Al Gore has lots of investments. I put up
a blog post on this. You knowÉhe's a multi multi-millionaire based on green
investments, but on the other hand, he's a multi multi-millionaire because he put his
money where his mouth was. And some people are like, "Well, he's moving the
debate; he has political friends. They're making laws that favor his companies."
Let's put that aside for a second. To get political action, essentiallyÉafter Katrina
destroyed New Orleans, we have a whole bunch of political action on levees. And
then everybody forgot about it and went on to the next thing. So politics moves
from one fear to another. The War on Iraq. Weapons of Mass Destruction.
We're going to die tomorrow. He has bombs. They've got that on tape. Bush
and Cheney and everybody saying he's got bombsÉit's going to happen tomorrow.
You thought 9/11 was bad. That was like fiction. But it was politically motivated
fiction. Last hand, and I'm going to move along on
climate change. What aboutÉa lot of people say there argument
against taxes to increase the cost of energy would be that so many jobs would be
lost because everything would get more expensive, and people would buy less,
andÉwhat do you think of that? I think it's bullshit. Everybody who's sitting
there going, "We're going to make jobs or lose jobs" is all bullshit. Period. So
here's what happensÑit's not jobsÉwhat they care about at jobsÉat companiesÉI've got
a coal mining company and I'm doing mountaintopÉI'm blowing the top of mountains
in West Virginia, dumping all of it into the river, destroying the ecosystem and
local community, but I've got jobs. If you tax coal, I'll lose jobs. No you won't
lose jobs, you'll lose your business. Those workers will go plant flowers or knit or they'll
work at a car company, or they'll do something else. All that rhetoric about jobs
is bullshit. It's all about giving money to the businesses. And especially the coal companies.
Especially the coal companies that have the mountain top mining right. Those
rights are worth nothing if you can't mine them. The workers will move to another
job. So what I say is likeÉdon't protect jobs, protect people. Protect people.
that creating jobs is just likeÉI've lost track of the number of times I've seen bullshit behind
that. It's likeÉprotect the jobs of US Auto Workers. Who gives a shit
about US autoworker jobs? Those people could work in a million jobs. But those auto
companiesÉthat's what they're trying to protect. There's equity. There's shares.
There's capital invested. That's what has been happening over and over.
Robert Reich, who was the labor secretary under Clinton, just gave me that
enlightenmentÉhell yeah, no corporate welfare. And he's like the most leftist
economist in theÉin the UC I guessÉin Berkeley. But he's absolutely right.
And when someone says, "Oh, you need to protect jobs at GM." It's likeÉthey don't
give a shit about jobsÉand the union guys did the same thing. It's likeÉprotect
union jobs. Because the union organizersÉthey would lose their jobs if all the union
workers go off and work at schools and plant trees, because there's no tree planting
union. Did you see that stupid thingÉtheÉService Workers International? They
were on strike somewhereÉI meanÉthe whole protest thing at Wheeler Hall
because they wanted to restore custodian jobsÉbut this Eagle Scout went and spent
200 hours clearing a path through the park. Because he wantedÉyou know Eagle
ScoutsÑyou've got to get a merit thing. He's like doing the good thing. You're a boy
scout. He's clearing a path; he spends 200 hoursÉthat's 5 weeks of nonstop, full-
time work to clear a path, and the union is protesting that he's taking their jobs.
Because they want a monopoly on clearing the leaves on the path, so you can be paid
$40 or $20 an hour plus pennies. That's not jobs. That's likeÉprotected stuff.
And it's the same thingÉI'll sayÉprofessors with tenureÉthey don't want
to work either. That's why they have tenure, so they don't have to work. That's
what tenure's all aboutÑlifetime job security.
That was a bit of a rant. Let me go back toÉso we know the US-China
dynamic. The Chinese are likeÉhey, you've got to pay us a lot of money. The US
is like, "We don't want to pay a lot of money." The Chinese are like, "We want to
pollute." The US is like "You can't pollute". So you could see where that's going.
It's very tough. Climate gate. Has anybody heard of this expression
recently? Last week? Climate gate. Some hackers did a good job (I think).
They exposed a bunch of emails and data from climate researchers and scientists
to the world. My dad (who does not believe in climate changeÉhe
watches a certain networkÉ) He sent me an e-mail: "Is this true?"
So what happened isÉ all of this data came amount and it says, "Oh, that whole
hockey stick (CO2, anybody seen that?Éthis is time, this is CO2É) That whole
hockey stick is actually like this. All this data is fabricated. Whatever. And so and so
wants to publish a paper in a journal saying that climate change isn't happening, but
so and soÉthe other academic says, "Don't publish it; I don't like him." Or "I don't
like his results." So these academics are essentially stabbing
in each other in the back, like usual. I had this on my blog this morning, so I'm kind
of reading you something. But basically, the whole climate gate is that
it exposed the whole backroom debate among climate scientists. A little bit of
dataÉI don't know what's going on with the data, but we will see, you guys should look
it up if you want to. A little bit on the dataÉdo we actually see global warming in
the data? It's a bigÉand I know that people who don't like climate change and do
like their SUVs and do not want to pay $6000 a yearÉhow are they going to see this
development about scientists maybe fabricating data? What are they going to say?
Conspiracy Conspiracy, I told you so. It's Al Gore. He
just wants to make money, which is probably true, right? But the thing isÉis
climate change a complete fabrication by a couple of scientistsÉthat intergovernmental
panel on climate change. Sounds like a communist conspiracy.
Well here's what I say, as a free market person. If any personÉif any scientist could
come out with evidence that climate change wasn't happening and global warming
wasn't happening, Exconn Mobile, British Petroleum, and everybody else would get
him the Nobel Prize (or her) of all time. Lifetime billion dollar a year income string
if you could prove that. Why wouldn't they? A whole bunch of special interests we
know are fighting tooth and nail against climate change. If there was incontrovertible
evidence that climate change wasn't happening, they would be so happy. They would
pay billions. They already have thousands of scientists working againstÉtrying
to find evidence that climate change is not happening. So some of those e-mails
and all that's just bullshit, in terms of why it matters.
It's typical and nice gossip, but I know they were going to say, "Oh, it's not
happening, but that'sÉI thinkÉyou should think about the whole incentives, right?
Who has an incentive to show this up? Let me tell you a little bit more about the
realities of negotiating over climate change. On campus, here, they have the Mathematical
Scientist Research Institute, where I used to work when I was a secretary
before I went to PhD land. And they had a workshop. Then I came back to the PhD,
which is kind of impressive. You knowÉsecretary to PhD. I was first in line
for the coffee, not last. I had privileges. So they did a workshop on games and climate
change. And they have some of the top game theorists in the world. What kind
of game is climate change? Is this a ludic game? Do we use ludic theory or conflict
theory? What does Ludic mean? Ludic means what? Rules. What does conflict
mean? No rules. You bring your baseball bat or your
gun, or your dinosaur. Tyrannosaurus Rex.
Is climate change a Ludic game? It's a conflict. There are no rules in climate change
negotiations. So at this MSRI thing, we had some of the topÉthis is like Princeton
and Yale and all these high-end schools (of course, Berkeley), and they're all coming
to work on mathematical models for solving climate change negotiations, etcetera.
They had all this game theoryÉthey had all these game theory and they had the first
mover, second mover advantage, the Stackelberg leaderÉthey had all that garbage
going on. And they were going to fix it, and they had a model, as all economists do,
and then I said, "Okay guys, I'm going to do my session." And what I said is, "Okay,
everybody in the room"Éand it was aÉlikeÉalmost the same number of people in
the room here. You guys are group A. B, C, and D.
A is America, C is China, B is bureaucrats, and D is the other people. You've got to
break it downÉbring it to the people. So we've got these 4 groups, and at the end
I ended up moving you guys together to make them one group. The bureaucrats were
supposed to figure out numbers. We started this thing with no numbers. These
guys are looking at, you know, per capita emissions and stuff like that. We needed data.
And the other people were all the rest of the people on the planet. Clearly,
this is the G2 type of negotiation. So what I said isÉAmerica and ChinaÉyour
job is to negotiate a climate change agreement. There are no rules. GO! And that'sÉ
America was like, "Okay. What we want to do is we wantÉwe will give you access to
technology. We want you to shut down the coal plant, we want free trade, we want
access to your markets. The Chinese are likeÉyou have to pay us a
lot of money, and we wantÉwe don't want to devalue our currency, and they're
going back and forth and back and forth. And if there's no rules, and there's no time
limit, and you have a bilateral monopoly (you guys remember that concept? A bilateral
monopoly?)Éthey both have market power.
Where does the equilibrium in a bilateral monopoly? Can you predict that ahead of
time? Do you remember that? Is that a yes or a no? Who thinks that you can
predict equilibrium ahead of time in a bilateral monopoly?
Hands up, yes. Hands up, you cannot. Hands up if you're asleep. Come on guys.
Who can predict the equilibrium in a bilateral monopoly? Yes or no? Raise your
hand! Yes. There's 2 yeses. No?
What are you saying? Let's try it again. Everybody put upÉboth of your hands. All
of them up. Put your hands down. Who thinks yes? In a bilateral monopoly you
can predict equilibrium? Yes? Up, up, up!
No? Okay, the no's are right. Thank god. The market.
So they can't get an equilibrium, right? They can't get a negotiation. So after awhile,
I said look, "B and D; they get to vote who they like better." They're going to have a
democratic vote. AndÉAmerica, you make your proposal, and China, you make your
proposal, and the world's best game theorists were in the room. And they knew
exactly how to write that proposal. Who knows what they did? I'll take three
suggestions, game theorists. Come on. I'll take with one suggestion, damn it. How
do you convince the rest of the world to go with your idea.
Pay them? Pay them.
America went to the rest of the world and said, "We'll pay you $10 trillion to accept
what we want." And they're like, "Yup." That was it, right? There's no analysis,
there was no negotiation, no binding treatiesÉthere's no bureaucracy, there's no
monitoring, there's no capÉwhatever the hell it was. Just give us money; we don't
care what you do with the planet. That was the world's best in the room negotiating
climate change. And in Copenhagen, I think it's going to be
worse. I don't even think they're going to offer money. There'll be nothing that happens.
That was a little bit depressing, but it was much more realistic, right?
Where was this? Sorry?
Where did this happen? This was at MSRI on campus during the summer.
Do you think the political regime in China will haveÉwe can't really hold the
government accountableÉ I think the political regime in China has
been really interesting. TheyÉI mean the party isÉnumber one job is to stay in power.
And they're not being dumb about it. The party in Burma is being dumb about it.
The Russians were dumb about it, or the USSR.
The Chinese party's likeÉwhoaÉthey're going to management and leadership
conferences figuring how to likeÉstay one step ahead of demand for people's
consumptions (stuff like that). So they have a very strong incentive to stay in power.
They have likeÉwhatever it isÉ15 or 50 thousand protests per year, but they
actually log, for some reason. So besides the minority problems, which areÉas
far as most of the party's concernedÉsmall. The government is doing
a reasonably good job of delivering the goods, and kind of like trying to surf the
wave of freedom. As far as I'm concerned, China's going toÉthe economic development
is going to go first, and political development will happen after as soon as people
start feeling likeÉas soon as they get thereÉyou know that Maslov's PyramidÉas
soon as they get the basic needs taken care ofÉI've got my food, I've got
my house, I've got my carÉwhoa, I want to talk now. Can I talk? That's when it will
happen. But anyway, the party's got big incentives.
Okay. I'm going to go over the briefings right now.
I'll get to these other things, but I just want to make feedback on that, and then Fei
and I are going to hand them back. The good news is the briefings were pretty
good. I didn't read them all, of course. You guys are reading each other's.
I'm going to go over 7 of them that gave me good ideas that I want to promote. Not
steal, as somebody noted. They will be promoted with your name.
First thing's first. Next week when you hand in the briefings, this is what you haveÉ
Don't do what some people did. Do not go on two pagesÉI saw there's one person
that went on two pages. They got nailed by the graders. Congratulations; they
should've. Put your own SID on the sheet. Don't put a
random number. We had to look up SIDs on some people. They got points taken off
because I don't need the extra work. And on the briefingÉif you didn't put a summary
on it, you got knocked down, as far as I'm concerned. When you were doing the grading,
and you didn't put a summary at the top? You lost a point.
Do what we ask you to do if you want to have your points.
So, when you bring it in next week, it's going to be the same game. Three copies,
three times. And your name. That's the easy thing. You can do that, right? Okay. So
bring that in; we're going to redistribute it at the end of class like we did last time.
It's going to be a mess, I'm sorry, but it's really very good.
You guys each hadÉyou graded 3 people, you had 3 people grading you. You got lots
of feedback, and hopefully it's helpful, in terms of learning.
And as I mentioned, learning and grades don't always go together.
I know that's annoying, but the world is not fair. The seven that I like, for example,
7.3, 5.7, 8.0, 8.3, 9.0, 10, and a 7.3. I didn't just choose 10s and saidÉooh, I like
those. But some of your peers would've graded different
ways. Some of the peer grading sucked, and I am
not going to question it. So the first thing isÉif your peers gave you a silver or a bronze,
or whatever, I am not going to question that. That is not negotiable. It
might not be fair, but neither is life. I don't think it was a huge disaster since
everybody got 5 points out the door no matter what. And I'm sorry if you feel like
it was unfair, but it was random. It wasn't someone choosing you to be unfair to you.
So that's a note about grading. As far as I was concerned, the vast majority of what
I read would've gotten less than 5 points. You're
lucky I didn't grade you. The average would have been 4 or 3. As you know,
the average was 7 because the vast majority of you didn't answer the question.
The question was: propose an economic or environmental program that will make
everybody better off and it may harm special interests, and you've got to get
reelected as a politician. You are writing a briefing for a politician. There's so many
people that hadÉthe worst ones were the ones that read me back the question. A
very nice, one page essay of my question. WellÉwe have to take special interests
into account because we want to make everybody better off, and sometimes there's
tricky things because you have to get reelectedÉI'm likeÉis there anything here?
Some of those people actually got 10s by their peer graders.
The second worst thing to do is to write down your favorite proposal. I really think
that everybody should have a chicken in their backyard because it's a great idea.
And that's why we should have a law about chickens in the backyard.
Disaster. It's not a disaster. It doesn't get to the political problem. If you're trying
to implement thisÉis there a special interest
group? Identify them. What are they going to fight against? How
do you counter that? How do you do some kind of judo on a special interest group?
Another one: people sitting there saying I think it's a great idea to have emissions
testing on cars because of smog. That'll be brilliant. If we implemented that in
CaliforniaÉlike we did in 1980? People were like reciting history as if that's
a new program. I was likeÉgood idea; it already happened.
The exception to this, which I thought was entertaining, and quite good, wasÉsome
peopleÉthey said, "This existing program sucks; we should end it and make people
better off." That was allowed. You had to come up with
something new. Don't tell me something that already works. We already know
that. Let's all be nice to each other. Let's be
green; it's good. Let's be happy. Those kinds of policies were not policies. I told you:
you are not allowed to evolve society. Over 12 generations, my policy will make sense.
No, that is not a policy. Win-win-win-win-win. My policy is a win-win-win-win-win.
If it's a win-win-win- win-win, why didn't it already happen?
Are you not doing careful analysis? Have you missed somebody? Because there's a
loser somewhere. If it's so obvious, it should've been done already.
We just make a law about this, and we have a regulation about that, and that'll fix
that, and that'll be the end of that. We'll have a law that we'll all be nice to each
other. You have to think about conflict rules sometimes.
You have to thinkÉif we're going to have a seatbelt law, what if people don't
put on their seatbelt? We'll have a fine. Well, who's going to do the fine? Well, there's
a cop. Well, what if the cop's eating donuts? WellÉ
You have to think it through. Sit there and think through all the ways of breaking
your own idea. And some peopleÉI know it's only a page. But you sit there and you
think about it, and then you write down. You don't have to write down the whole
thought process. You say, "Oh, and by the way, to get the donut eating out to give
you the ticket, you give a cop, whateverÉhalf the bounty for every unseat belted
person." Oh, but when the cop makes it up, and then
you're trying to catch people who really have seatbelts onÉwell then you have to have
a camera on theÉ You can do that; it's okay. You give a one
page summary. There was a lot of critical thinking going onÉand obviously you guys
are putting pen to paper. And by the way, in the next week when you're writing
briefing two, hopefully, this kind of advice will be helpful. You'll take that into
account. As you all know, you are going to be grading each other. There won't be me.
So when you're grading, also keep these things in mind.
All we have to do is educate people. No. That is not a solution. Education as a
solution is not a solution. There's lots of educated people out there screwing up the
world right now. They have goodÉ In fact economists are quite good at it. A
PhD in screwing up the world. Look at the financial meltdown on Wall Street. Some of
the smartest people on the planet have fucked over the financial system in order
to take home their $10 million bonus at a cost of $100 million or a billion dollars
to a taxpayer. Education is not a solution. Let's be goodÉI said that already.
Subsidies are very tough. If you wantedÉa lot of people are likeÉall we have to do
is tax this and subsidize thisÉwhere does that
money come from? What's the opportunity cost? If we just subsidize solar
panels, that'll fix it. Well, yeah, maybe? But that money has to come from somewhere
else. You have a limited budget called your taxpayer's pockets. Let's subsidize a
certainÉ There were some people that were likeÉall
we have to do is to give more money to the such and such a coal industry. I'm likeÉokayÉyeah,
you'll get that passed, but you just helped a special interest. Your job
is not to help a special interest. That's easy. Your job is to help society. Potentially
at a cost of special interests. We'll just tell people and make a law, and
they'll change their behavior. There's plenty of people thatÉwho doesn't speed?
Who never have speeded against the speed limit? 25 zone? 35 zone? 45 zone? You
ride a bike, right? No. 65? So 99% of people speed. It's against the law, and yet,
they break it. Do not just say: we make a law, and that will fix it. Remember that enforcement
matters. Don't make up numbers. Don't say that there
will be a vast benefit, or huge savings, or trillionsÉsomeone put trillions in there?
I meanÉyou can have trillions of something, but that was like off by several
orders of magnitude. If you're doing a cost benefit, and you assume at trillion dollars
of benefit, then yes, that helps, right? But you can't just assume high numbers.
Alright, so let me tell you some of the ones that I liked, just briefly. I'm putting the
4 digits up, so the people that are in the class
can feel a little bit appraised, even if their grade did not reflect what they wantedÉ
One person that talked about using feed-in tariffsÑthe idea that you would pay
home owners to push energy back in the gridÉand that would encourage solar
panels, or whatever. That's an old ideaÉgood, but an old idea.
Another oneÑexpand the market. Let's have cap and trade inside of California. We
can include Mexico and the developing world. That's another old idea. A good one,
but an old idea. There was one that I liked, or I thought I
likedÉyeah. Moving theÉputting the carbon tax on and rebating it against income
tax. That was a good idea, in a sense, that it wasÉif you're looking for democratic
and you're looking for votes, then helping the majority of people in terms of
a tax rebate and taxingÉand soaking the rich is a good idea.
It's difficult, as you know. I meanÉObama's promising to fix health care by taxing
the rich, and we see where that's going. But it's a good idea to shift it to Carbon. If
you're going for a voteÑnot a bad idea. I reallyÉone that stuck out wasÉlet's tax
the polluterÉabove average polluters and we'll rebate cash back to below average polluters.
That changesÉit's the same idea. If you just have cap and tradeÉit's the same
idea as cap and trade, which is that if you areÉif you're using less that 500 tons,
you're going to make money. But it's an explicitÉkind of guaranteed return
on below average pollution. That was a good idea. 3025 is your last four. And 2820
was the one who said let's move carbon taxes.
Let's outsource the selling of the program to scientistsÑI thought that was quite
good. take it out of political handsÉthis has been done a lot in terms of blue ribbon
panels. But there's something to work with there that
I'm going to look more in to. Essentially, putting the power with technocrats
instead of congressional staffers. That was 3489.
Branding, I thought was quite good in terms of a consciousness raising idea. 3706.
So the government will call itÉI meanÉSingapore's recycled water? Toilet water?
You know what they call it? How they brand it? Anybody from Singapore?
You can buy it from the bottle. Clarified toilet water. People drink it in Singapore.
And they take it to water conferences. They're very popular. So branding. Good
idea. There was an open land initiativeÉ4487ÉtaxingÉit
was interesting because it was a time shifting situation. You would tax local
property owners in order to buy a piece of land that would increase the values of
their properties. That's kind of shifting income. I tax you
now; you get the benefit later. Very good address of special interestsÑthe construction
companies were also in there, and they would benefit because their property
would be worth more money. That wasÉit was not exactly a win-win-win
because there was a bit of time shifting going on, but it was a good idea.
6107. Environmental direct democracy. This was alsoÉenvironmental justiceÉthat
was quite good. The idea that you would bring in the local community in terms of
voting and empowerment and networking. The biggest problem in environmental
programs is getting people to sit around in the church and talk about the
environment and make a move. I thought that was a very good idea.
And the last one is let voters decide water prices. 8300. That actuallyÉI never even
thought of it. It's a good idea. Because votersÉthey're always bitching about water
prices going up, but if they actually vote on it, and they decide where to set water
prices, then that could end up working out in terms of kind of soak the rich. Or soak
the soakers, I guess. So those are some good ideas and some feedback. I want to
hand these back now. So let's do this.