Bjorn Lomborg’s Copenhagen Consensus Against Kyoto


(p. 8) Bjorn Lomborg, a Danish statistician who recently led the Copenhagen Consensus, an economic analysis of global environment and development issues , said that while global warming was a serious problem, Kyoto-style limits would have little impact and would divert resources better spent on alleviating poverty.

He said one element missing from most climate discussions was the need for a more vigorous effort to improve climate-friendly energy technologies like solar power and carbon capture, in which greenhouse emissions are trapped and pumped underground before they can escape into the atmosphere.

While many advocates have proposed an emissions tax, Dr. Lomborg said a much smaller investment in research and development on such technologies would be more likely to help in the long run.


For the full story, see: 

ANDREW C. REVKIN.  "Talks to Start On Climate Amid Split On Warming."  The New York Times, Section 1  (Sun., November 5, 2006):  8. 


“Unlikely Collection of French Socialists” Liberated Global Capital Flows?


CapitalRulesBK.jpg   Source of book graphic:


Rawi Abdelal, a Harvard Business School professor, has advanced a novel theory in "Capital Rules: The Construction of Global Finance." Drawing on extensive documentary evidence, as well as dozens of interviews with high-level finance officials and midlevel bureaucrats, he tells a fascinating (and largely unknown) tale: how a clutch of French socialists helped to upend economic orthodoxy and lead the charge for lifting restrictions on capital flows within Europe and throughout the world.

. . .

Mr. Abdelal’s story heats up with the election of Francois Mitterrand in 1981. The new president, together with his majority Socialist Party, set out to storm the Bastille of the economy. He announced plans to nationalize the banks and restrict cross-border capital flows to such a degree that French citizens could take the equivalent of only $427 with them for leisure travel outside France (and were prohibited from using credit cards during such travel). Rather than create a socialist Shangri-La, the moves led to economic chaos. The French had to devalue the franc three times in two short years. Mitterrand then made what the French would elegantly refer to as a tournant but we may bluntly call a U-turn.

This painful episode provided a powerful lesson to a number of senior French officials. Said one: "We recognized, at last, that in an age of interdependence capital would find a way to free itself, and we were obliged to liberate the rest." And so in a Nixon-goes-to-China move, an unlikely collection of French socialists set out to liberalize the country’s controls on cross-border capital flows with a determination that gave new meaning to laissez-faire.

. . .

Mr. Abdelal is unequivocal about the value of Europe’s action: "Global financial markets are global primarily because the process of European financial integration became open and uniformly liberal." He also highlights how free capital flows got a boost from the two primary credit-rating agencies, Standard & Poor’s and Moody’s. In the 1990s, both began to give higher ratings to government-backed debt when the country in question had an open capital account.


For the full review, see: 

MATTHEW REES.  "Business Bookshelf:  Why Money Can Now Make Its Way Around the World."  The Wall Street Journal (Weds., February 14, 2007):  D12.

(Note:  ellipses added.)


Boof reference: 

Rawi Abdelal.  CAPITAL RULES.  Harvard University Press, 304 pages, $49.95.


Even France Recognizes English as the Language of Business


The story below provides further evidence that those who are working hard to make English the mandatory language of the United States, should find themselves a real problem to worry about.


PARIS, April 7 — When economics students returned this winter to the elite École Normale Supérieure here, copies of a simple one-page petition were posted in the corridors demanding an unlikely privilege: French as a teaching language.

“We understand that economics is a discipline, like most scientific fields, where the research is published in English,” the petition read, in apologetic tones. But it declared that it was unacceptable for a native French professor to teach standard courses to French-speaking students in the adopted tongue of English.

In the shifting universe of global academia, English is becoming as commonplace as creeping ivy and mortarboards. In the last five years, the world’s top business schools and universities have been pushing to make English the teaching tongue in a calculated strategy to raise revenues by attracting more international students and as a way to respond to globalization.

Business universities are driving the trend, partly because changes in international accreditation standards in the late 1990s required them to include English-language components. But English is also spreading to the undergraduate level, with some South Korean universities offering up to 30 percent of their courses in the language. The former president of Korea University in Seoul sought to raise that share to 60 percent, but ultimately was not re-elected to his post in December.

In Madrid, business students can take their admissions test in English for the elite Instituto de Empresa and enroll in core courses for a master’s degree in business administration in the same language. The Lille School of Management in France stopped considering English a foreign language in 1999, and now half the postgraduate programs are taught in English to accommodate a rising number of international students.

Over the last three years, the number of master’s programs offered in English at universities with another host language has more than doubled, to 3,300 programs at 1,700 universities, according to David A. Wilson, chief executive of the Graduate Management Admission Council, an international organization of leading business schools that is based in McLean, Va.

“We are shifting to English. Why?” said Laurent Bibard, the dean of M.B.A. programs at Essec, a top French business school in a suburb of Paris that is a fertile breeding ground for chief executives.

“It’s the language for international teaching,” he said. “English allows students to be able to come from anyplace in the world and for our students — the French ones — to go everywhere.”


For the full story, see: 

DOREEN CARVAJAL.  "English as Language of Global Education."  The New York Times  (Weds., April 11, 2007):  A21.


Chichen Itza May Have Lasted Longer than Other Mayan City-States Because of Its Free Trade


  The guide told us that this area of pillars at Chichen Itza, in the Yucatan of Mexico, is thought to have been a market area.  (Photo taken by me on April 8, 2007, at the excursion to Chichen Itza arranged for the Association of Private Enterprise Education.)


Usually we think of the Catholic Church’s great damage to knowledge being its persecution of Galileo and attempted suppression of heliocentricism.  But the suppression quickly failed and nothing permanent was lost.

A greater harm to knowledge may have been done when, in the name of the inquisition, countless Mayan manuscripts were burned by the Spanish conquistadors.

Evidence was destroyed that likely would have helped us understand how the Mayan society worked.

For example, we were told on our visit to Chichen Itza that one hypothesis has it that Chichen Itza lasted 300 years longer than all other Mayan city-states because it was the only city-state dominated by cosmopolitan merchant and entrepreneur culture–an hypothesis that I find highly congenial.

Unfortunately, much of the evidence that might have confirmed, elaborated, or refuted this hypothesis, was destroyed forever.


The Importance of Entrepreneurial Innovation


The U.S. in the midst of the most entrepreneurial era in its history, with more than 500,000 Americans involved in launching their own companies each year and an estimated 10% to 15% of all working adults engaged in some kind of entrepreneurial activity. And among these entrepreneurs, it is the innovators who matter most.

Their enterprises are the ones which create the jobs and industries of the future — as they have lifted the economy’s productivity in the past. The automobile, the airplane, the telephone, air conditioning, the personal computer and its software, and Internet search engines — all were launched by innovative entrepreneurs rather than large companies.  


For the full commentary, see: 

ROBERT E. LITAN.  "Innovators Matter Most."  The Wall Street Journal  (Sat., February 24, 2007):   A8. 


Mexican Federal Taxi “Charters” Increase Taxi Prices


     A non-federally-chartered taxi leaves the Cancun Hilton, headed for the Cancun airport, charging $23.  An identical, but federally-chartered cab, making the reverse trip, charges $40.  (Photo by Art Diamond.)


When we arrived at the Cancun airport we faced a chaotic environment where many Mexicans were yelling at us to buy taxi tickets.  After buying a ticket for $40, someone escorted us to a crowded, chaotic place to wait for a cab.  We waited and waited in the noise and the heat.  At some point, my daughter Jenny commented, "These people need to get organized."

Yes, Jenny they sure do!  And you might think that what they need in order to get organized, is for the government to come in to organize them.

But it turns out that the government has already come in.  Only federally charged taxis are allowed to take passengers from the airport to the hotel zone.  The price is fixed at $40.  On the other hand, any taxi may take passengers back to the airport, from the hotel zone.  The base price for a return trip was $23 .  (I added a $2 tip out of sympathy for the cabbie not driving a federally anointed cab.)

So, yes, these people need to get organized, and the best way to do that is to get their government out of their way, so that they can organize themselves through the free market.


Note:  relevant guide book passage:  "[Returning to the airport] the rate will be much less for the trip from the airport.  (Only federally chartered taxis may take fared from the airport, but any taxi may bring passengers to the airport.)"  (p. 78)

Note:  italics in original; bracketed phrase added.



Baird, David, and Lynne Bairstow.  Frommer’s Cancun, Cozumel  &  the Yucatan 2007.  Hoboken, NJ:  Wiley Publishing, Inc., 2006.


Nordhaus Critiques Stern’s Case for Environmental Disaster

My only major disagreement with the commentary below, is that I have much more confidence that, given free market institutions, our descendants will have the incentives, energy, and ingenuity, to solve the problems that they will face.


The Stern Review’s most influential critic has probably been William Nordhaus, a 65-year-old Yale professor who is as mainstream as economists come.  Jeffrey D. Sachs, the anti-poverty advocate, calls Mr. Nordhaus “about the most reasonable man I know.”

He was the first speaker after lunch, and, of course, he had some very nice things to say about Sir Nicholas. The report “was presented here very eloquently by a distinguished scholar,” Mr. Nordhaus said. But then came the juicy stuff: the Stern Review “commits cruel and unusual punishment on the English language,” Mr. Nordhaus said, and the British government’s opinion on climate change is no more infallible than was its prewar view about weapons of mass destruction in Iraq.

This was fairly tame compared with the comments of another Yale economist, Robert O. Mendelsohn. “I was awestruck,” he said, comparing Sir Nicholas to “The Wizard of Oz.” But “my job is to be Toto,” he added, in the same good-humored tone Mr. Nordhaus used. “Is it in fact The Wizard of Oz, or is it nothing at all?”

The two professors raised some questions about the science in the Stern Review. Mr. Nordhaus wondered if carbon emissions and temperatures would rise as quickly as the report suggests, and Mr. Mendelsohn predicted that people would learn to adapt to climate change, reducing its ultimate cost.

But their main objection revolved around something called the discount rate. The Stern Review assumed that a dollar of economic damage prevented a century from now (adjusted for inflation) is roughly as valuable as a dollar spent reducing emissions today. In effect, the report argues for spending the money to cut emissions because future generations have as much claim on resources as current generations. “I’ve still not heard a decent ethical argument” for believing otherwise, Sir Nicholas said at the debate.

I’m guessing that your instinct is to agree with him. Mine certainly was. The problem is that none of us actually behave this way. If we really thought that our great-grandchild deserved our money as much as we do, we would never go out to dinner again. Instead, we would invest the $50 we would have spent on dinner, confident that it would grow over time and become perhaps $1,000 for our great-grandchild to put toward health care, education or a supercomputer. Any of that is preferable to our measly dinner.

But a dollar today truly is more valuable than a dollar a century from now. For one thing, your great-grandchild will almost certainly be richer than you are and won’t need your money as much as you do. So spending a dollar on carbon reduction today to avoid a dollar’s worth of economic damage in 2107 doesn’t make sense. We would be better off putting the money toward something likely to have a higher return than alternative energy, like education.

Technically, then, Sir Nicholas’s opponents win the debate. But in practical terms, their argument has a weak link. They are assuming that the economic gains from, say, education will make future generations rich enough to make up for any damage caused by climate change. Sea walls will be able to protect cities; technology can allow crops to grow in new ways; better medicines can stop the spread of disease.


For the full commentary, see: 

DAVID LEONHARDT.  "Economix; A Battle Over the Costs of Global Warming."  The New York Times  (Weds., February 21, 2007):  C1 & C5.