Category: Economics

Pious Climate “Scare Tactics” Lead to Despondency and Bad Policy

(p. A15) Whatever happened to polar bears? They used to be all climate campaigners could talk about, but now they’re essentially absent from headlines. Over the past 20 years, climate activists have elevated various stories of climate catastrophe, then quietly dropped them without apology when the opposing evidence becomes overwhelming. The only constant is the scare tactics.

. . .

After years of misrepresentation, it finally became impossible to ignore the mountain of evidence showing that the global polar-bear population has increased substantially.

. . .

For the past three years the Great Barrier Reef has had more coral cover than at any point since records began in 1986, with 2024 setting a new record.

. . .

Today, killer heat waves are the new climate horror story. In July President Biden claimed “extreme heat is the No. 1 weather-related killer in the United States.”

He is wrong by a factor of 25. While extreme heat kills nearly 6,000 Americans each year, cold kills 152,000, of which 12,000 die from extreme cold. Even including deaths from moderate heat, the toll comes to less than 10,000. Despite rising temperatures, age-standardized extreme-heat deaths have actually declined in the U.S. by almost 10% a decade and globally by even more, largely because the world is growing more prosperous. That allows more people to afford air-conditioners and other technology that protects them from the heat.

. . .

Scare tactics leave everyone—especially young people—distressed and despondent. Fear leads to poor policy choices that further frustrate the public. And the ever-changing narrative of disasters erodes public trust.

Telling half-truths while piously pretending to “follow the science” benefits activists with their fundraising, generates clicks for media outlets, and helps climate-concerned politicians rally their bases. But it leaves all of us poorly informed and worse off.

For the full commentary see:

Bjorn Lomborg. “Polar Bears, Dead Coral and Other Climate Fictions.” The Wall Street Journal (Thursday, Aug. 1, 2024): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 31, 2024, and has the same title as the print version.)

“Heavily Subsidized Renewables” Mostly Add to Total Energy Consumed Instead of Replacing Fossil Fuels

(p. A17) Despite extravagant hype, the green-energy transition from fossil fuels isn’t happening. Achieving a meaningful shift with current policies is too costly. We need to change policy direction entirely.

. . .

Studies show that when countries add more renewable energy, it does little to replace coal, gas or oil. It simply adds to energy consumption. Recent research shows that for every six units of green energy, less than one unit displaces fossil-fuel energy. The Biden administration finds that while renewable energy sources worldwide will dramatically increase up to 2050, that won’t be enough even to begin replacing fossil fuels—oil, gas and coal will all keep increasing, too.

. . .

The current plan underpinning the green-energy transition mostly insists that pushing heavily subsidized renewables will magically make fossil fuels disappear. But such expectations are “misleading,” as a 2019 academic study concluded. During past additions of a new energy source, the researchers found, it has been “entirely unprecedented for these additions to cause a sustained decline in the use of established energy sources.”

What causes us to change our relative use of energy? One study investigated 14 shifts that happened over the past five centuries, such as when farmers went from plowing fields with animals to tractors powered by fossil fuels. Invariably, the new energy source would be better or cheaper.

. . .

The way to achieve an eventual transition is to improve green-energy alternatives. That means investing much more in research and development. Innovation is needed in wind and solar, as well as storage, nuclear energy, and other possible solutions. Bringing the costs of low-CO2₂energy sources below those of fossil fuels is the only way that green solutions can be implemented globally, and not merely by a few wealthy countries.

When politicians say the green transition is here, they are really asking voters to support throwing more good money after bad. We need to be smarter.

For the full commentary see:

Bjorn Lomborg. “The ‘Green Energy Transition’ That Wasn’t.” The Wall Street Journal (Tuesday, June 25, 2024): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 24, 2024, and has the same title as the print version.)

The “recent research” mentioned above is:

Rather, Kashif Nesar, and Mantu Kumar Mahalik. “Investigating the Assumption of Perfect Displacement for Global Energy Transition: Panel Evidence from 73 Economies.” Clean Technologies and Environmental Policy (2023) https://doi.org/10.1007/s10098-023-02689-8.

The “2019 academic study” mentioned above is:

York, Richard, and Shannon Elizabeth Bell. “Energy Transitions or Additions?: Why a Transition from Fossil Fuels Requires More Than the Growth of Renewable Energy.” Energy Research & Social Science 51 (May 2019): 40-43.

The study of 14 shifts in type of energy that was mentioned above is:

Fouquet, Roger. “The Slow Search for Solutions: Lessons from Historical Energy Transitions by Sector and Service.” Energy Policy 38, no. 11 (Nov. 2010): 6586-96.

A Dollar Spent on Medicaid Yields (at Most) 40 Cents of Value to Recipients

(p. C3) A . . . National Bureau of Economic Research study estimated the value of Medicaid to its recipients at between 20¢ and 40¢ per dollar of expenditure, with the majority of the value going to health-care providers like doctors and hospitals. By comparison, the Earned Income Tax Credit—a cash transfer program designed to enhance the incomes of the working poor—delivers around 90¢ of value to its recipients per dollar of expenditure. Given that more than half of Obamacare’s reduction in the numbers of the uninsured has been from its expansion of Medicaid, this makes the law look more like welfare for the medical-industrial complex than support for the needy.

For the full commentary see:

Daniel P. Kessler. “The Health of Obamacare.” The Wall Street Journal (Saturday, Dec. 12, 2015 [sic]): C3.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Dec. 11, 2015 [sic], and has the same title as the print version.)

The NBER working paper mentioned above was later published in:

Finkelstein, Amy, Nathaniel Hendren, and Erzo F. P. Luttmer. “The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment.” Journal of Political Economy 127, no. 6 (Dec. 2019): 2836-74.

(Note: my title for this blog entry continues to be supported in the 2019 published version of the earlier NBER working paper.)

“A Pattern of Stumbles Across the World of Generative A.I.”

(p. B1) Days before gadget reviewers weighed in on the Humane Ai Pin, a futuristic wearable device powered by artificial intelligence, the founders of the company gathered their employees and encouraged them to brace themselves. The reviews might be disappointing, they warned.

. . .

(p. B5) Its setbacks are part of a pattern of stumbles across the world of generative A.I., as companies release unpolished products. Over the past two years, Google has introduced and pared back A.I. search abilities that recommended people eat rocks, Microsoft has trumpeted a Bing chatbot that hallucinated and Samsung has added A.I. features to a smartphone that were called “excellent at times and baffling at others.”

For the full story see:

Tripp Mickle and Erin Griffith. “Inside the Spectacular Flop of a Bold A.I. Device.” The New York Times (Friday, June 7, 2024): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the story was updated June 7, 2024, and has the title “‘This Is Going to Be Painful’: How a Bold A.I. Device Flopped.”)

When Hospitals Compete Less, Prices Rise More

(p. B10) If the fries at your local burger joint are soggy or if you’re suddenly charged $25 for ketchup, you’ll probably eat somewhere else next time. That’s the beauty of competition.

Healthcare doesn’t quite work that way. For starters, you don’t always get to choose your medical provider—your insurer often does by contracting with them. And even the insurer can’t easily walk away, either: Giant hospital systems are swallowing up big chunks of the country’s healthcare system through vertical and horizontal integration. That leaves fewer parties with which to negotiate.

If McDonald’s bought Burger King and then Wendy’s, you could always cook at home instead, but nearly everyone needs to go to the doctor or the hospital at some point. Patients also aren’t nearly as cost sensitive as they would be with other purchases because employers and insurers pick up much of the tab. They often don’t even know the price ahead of time.

Hospital executives argue that mergers lead to improved efficiency and better outcomes for patients. But, after years of rampant consolidation between hospitals, most regions in the U.S. are now dominated by a few large players. That has led to higher prices and no significant improvements in patient care.

Rising costs don’t just lead to alarmingly high medical bills—they also make all of us worse off by increasing premiums, the bulk of which are paid by the nation’s employers. That affects even people who rarely visit a doctor. As those premiums soar and employers look to offset the cost, they indirectly eat into people’s paychecks.

Over the past two decades, there have been more than 1,000 mergers among the country’s approximately 5,000 hospitals, according to a forthcoming paper in American Economic Review: Insights.

For the full commentary see:

David Wainer. “As Hospitals Grow, So Does Your Bill.” The Wall Street Journal (Friday, June 7, 2024): B10.

(Note: the online version of the commentary has the date June 6, 2024, and has the same title as the print version.)

The paper in American Economic Review: Insights, mentioned above, is:

Brot-Goldberg, Zarek, Zack Cooper, Stuart Craig, and Lev Klarnet. “Is There Too Little Antitrust Enforcement in the U.S. Hospital Sector?” American Economic Review: Insights (forthcoming).

Gates’s TerraPower Breaks Ground on Small Nuclear Reactor

(p. A16) Outside a small coal town in southwest Wyoming, a multibillion-dollar effort to build the first in a new generation of American nuclear power plants is underway.

Workers began construction on Tuesday on a novel type of nuclear reactor meant to be smaller and cheaper than the hulking reactors of old and designed to produce electricity without the carbon dioxide that is rapidly heating the planet.

The reactor being built by TerraPower, a start-up, won’t be finished until 2030 at the earliest and faces daunting obstacles. The Nuclear Regulatory Commission hasn’t yet approved the design, and the company will have to overcome the inevitable delays and cost overruns that have doomed countless nuclear projects before.

What TerraPower does have, however, is an influential and deep-pocketed founder. Bill Gates, currently ranked as the seventh-richest person in the world, has poured more than $1 billion of his fortune into TerraPower, an amount that he expects to increase.

“If you care about climate, there are many, many locations around the world where nuclear has got to work,” Mr. Gates said during an interview near the project site on Monday. “I’m not involved in TerraPower to make more money. I’m involved in TerraPower because we need to build a lot of these reactors.”

Mr. Gates, the former head of Microsoft, said he believed the best way to solve climate change was through innovations that make clean energy competitive with fossil fuels, a philosophy he described in his 2021 book, “How to Avoid a Climate Disaster.”

Nationwide, nuclear power is seeing a resurgence of interest, with several start-ups jockeying to build a wave of smaller reactors and the Biden administration offering hefty tax credits for new plants.

. . .

In March [2024], TerraPower submitted a 3,300-page application to the Nuclear Regulatory Commission for a permit to build the reactor, but that will take at least two years to review. The company has to persuade regulators that its sodium-cooled reactor doesn’t need many of the costly safeguards required for traditional light-water reactors.

“That’s going to be challenging,” said Adam Stein, director of nuclear innovation at the Breakthrough Institute, a pro-nuclear research organization.

TerraPower’s plant is designed so that major components, like the steam turbines that generate electricity and the molten salt battery, are physically separate from the reactor, where fission occurs. The company says those parts don’t require regulatory approval and can begin construction sooner.

For the full story see:

Brad Plumer and Benjamin Rasmussen. “Climate-Minded Billionaire Makes a Bet on Nuclear Power.” The New York Times (Thursday, June 13, 2024): A16.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date June 11, 2024, and has the title “Nuclear Power Is Hard. A Climate-Minded Billionaire Wants to Make It Easier.”)

Gates’s 2021 book, mentioned above, is:

Gates, Bill. How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need. New York: Knopf, 2021.

Many Workers Happily Accept Lower Pay if They Can Work Remotely

(p. A15) The U.S. inflation rate tumbled from June 2022 to June 2023. It was no slide down the Phillips curve of the sort that textbooks attribute to tighter monetary policy. Instead, inflation fell 6 percentage points as unemployment stayed low. It is thus a mistake to credit this episode to the Federal Reserve’s departure from low interest rates.

. . .

Employees initially reaped the benefits of remote work, because their wages reflected pre-pandemic conditions and expectations. Over time, pay adjusted and employers adapted, eventually allowing them to benefit from slower wage growth.

My research quantifies this source of wage-growth moderation. Along with the Atlanta Fed, our team asked hundreds of business executives whether remote work affected their firms’ wages. Thirty-eight percent told us their companies had relied on the work-from-home boom to moderate wage-growth pressures in the previous 12 months. Forty-one percent said their firms planned to use remote work to restrain wage growth in the next 12 months. We found that the boom reduced overall wage growth by 2 percentage points from spring 2021 to spring 2023. In all likelihood, the effects extended beyond this interval, because pay adjusts slowly.

Remote work cuts costs in other ways, too. When employees work on site only two days a week, their companies need less space.

For the full commentary see:

Steven J. Davis. “Working at Home Helped Whip Inflation.” The Wall Street Journal (Thursday, June 20, 2024): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 19, 2024, and has the same title as the print version.)

Davis’s research mentioned above is:

Barrero, Jose Maria, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov. “The Shift to Remote Work Lessens Wage-Growth Pressures.” National Bureau of Economic Research Working Paper # 30197, July 2022.

Starlink Gives Remote Tribes Voice, Information, and Fast Help in Emergencies

(p. 12) . . . Starlink, . . . has quickly dominated the satellite-internet market worldwide by providing service once unthinkable in . . . remote areas. SpaceX has done so by launching 6,000 low-orbiting Starlink satellites — roughly 60 percent of all active spacecraft — to deliver speeds faster than many home internet connections to just about anywhere on Earth, including the Sahara, the Mongolian grasslands and tiny Pacific islands.

Business is soaring. Mr. Musk recently announced that Starlink had surpassed three million customers across 99 countries. Analysts estimate that annual sales are up roughly 80 percent from last year, to about $6.6 billion.

. . .

. . . perhaps Starlink’s most transformative effect is in areas once largely out of the internet’s reach, like the Amazon. There are now 66,000 active contracts in the Brazilian Amazon, touching 93 percent of the region’s legal municipalities. That has opened new job and education opportunities for those who live in the forest. It has also given illegal loggers and miners in the Amazon a new tool to communicate and evade authorities.

One Marubo leader, Enoque Marubo (all Marubo use the same surname), 40, said he immediately saw Starlink’s potential. After spending years outside the forest, he said he believed the internet could give his people new autonomy. With it, they could communicate better, inform themselves and tell their own stories.

Last year, he and a Brazilian activist recorded a 50-second video seeking help getting Starlink from potential benefactors. He wore his traditional Marubo headdress and sat in the maloca. A toddler wearing a necklace of animal teeth sat nearby.

They sent it off. Days later, they heard back from a woman in Oklahoma.

. . .

Allyson Reneau’s LinkedIn page describes her as a space consultant, keynote speaker, author, pilot, equestrian, humanitarian, chief executive, board director and mother of 11 biological children. In person, she says she makes most of her money coaching gymnastics and renting houses near Norman, Okla.

. . .

Enoque was asking for 20 Starlink antennas, which would cost roughly $15,000, to transform life for his tribe.

. . .

[Allyson Reneau said] “One tool would change everything in their life. Health care, education, communication, protection of the forest.”

Ms. Reneau said she bought the antennas with her own money and donations from her children.

. . .

The internet was an immediate sensation.

. . .

They spend lots of time on WhatsApp. There, leaders coordinate between villages and alert the authorities to health issues and environmental destruction. Marubo teachers share lessons with students in different villages. And everyone is in much closer contact with faraway family and friends.

To Enoque, the biggest benefit has been in emergencies. A venomous snake bite can require swift rescue by helicopter. Before the internet, the Marubo used amateur radio, relaying a message between several villages to reach the authorities. The internet made such calls instantaneous. “It’s already saved lives,” he said.

For the full story see:

Jack Nicas and Victor Moriyama. “The Internet’s Final Frontier: Remote Amazon Tribes of Brazil.” The New York Times, First Section (Sunday, June 2, 2024): 1 & 12-13.

(Note: ellipses, and bracketed words, added.)

(Note: the online version of the story was updated June 21 [sic], 2024, and has the title “The Internet’s Final Frontier: Remote Amazon Tribes.”)

People Feel “Stuck” in Lives Lacking Freedom and Hope

People need more control over their lives to feel hopeful for a free flourishing future. Fewer government regulations and more innovative firm managers could allow more of us to be “unstuck,” working on challenging but doable projects that improve the world and allow fulfilment. (I discuss these issues in more depth in Openness to Creative Destruction.)

(p. 9) The hallways on the television shows I watch have been driving me mad. On one sci-fi show after another I’ve encountered long, zigzagging, labyrinthine passageways marked by impenetrable doors and countless blind alleys — places that have no obvious beginning or end. The characters are holed up in bunkers (“Fallout”), consigned to stark subterranean offices (“Severance”), locked in Escher-like prisons (“Andor”) or living in spiraling mile-deep underground complexes (“Silo”). Escape is unimaginable, endless repetition is crushingly routine and people are trapped in a world marked by inertia and hopelessness.

The resonance is chilling: Television has managed to uncannily capture the way life feels right now.

We’re all stuck.

What’s being portrayed is not exactly a dystopia. It’s certainly not a utopia. It’s something different: a stucktopia. These fictional worlds are controlled by an overclass, and the folks battling in the mire are underdogs — mechanics, office drones, pilots and young brides. Yet they’re also complicit, to varying degrees, in the machinery that keeps them stranded. Once they realize this, they strive to discard their sense of futility — the least helpful of emotions — and try to find the will to enact change.

. . .

We’re not stuck in our circumstance. We’re stuck in the ways of living that perpetuate it.

If enough of us give up the sense that things are inevitable — that we’re stuck — it’s possible that we can course-correct humanity, or at least nudge it toward a hopeful path.

There’s another more realistic option that offers a thrill and reward of its own. If we don’t let the stucktopia keep its hold on us, if we rebuke it, maybe we shift ourselves ever so slightly toward optimism, and give the system whatever small hell we can.

For the full commentary see:

Hillary Kelly. “It’s Not Your Imagination. We’re All Stuck.” The New York Times, SundayOpinion Section (Sunday, July 7, 2024): 9.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date July 6, 2024, and has the title “Welcome to Stucktopia.”)

With Metformin Patent Expired, No Firm Has Incentive to Fund $50 Million Randomized Clinical Trial to Show It Aids Longevity

The article quoted below was published eight years ago. Dr. Barzilai and his team are still, even now, trying to raise the (probably higher) funds to conduct the metformin clinical trial. Firms have no incentive to conduct the clinical trial. Since the patent for metformin (originally issued for its efficacy against diabetes) expired in the year 2000, even if the clinical trial succeeded, no firm would be able to recover in revenue the $50 cost of conducting the clinical trial. Clinical trials are so hugely expensive largely due to the large and long Phase 3 component, intended to prove efficacy. That is why I salute Milton Friedman’s suggestion that a step in the right direction would be for the FDA to only mandate the smaller and quicker Phase 1 and Phase 2 components, mainly intended to prove safety. If the total cost of the clinical trial was much lower, it might be easier to find non-profit or academic funding. (It’s hard to raise $50 million on a GoFundMe page!)

The system is set up so that cheap (off-patent) drugs like metformin do not get tested, and so do not get FDA approval for off-label uses. So the system is set up to reduce the use of low cost, but possibly effective, medicines.

(p. D5) “Aging is by far the best predictor of whether people will develop a chronic disease like atherosclerotic heart disease, stroke, cancer, dementia or osteoarthritis,” Dr. James L. Kirkland, director of the Kogod Center on Aging at the Mayo Clinic, said in an interview. “Aging way outstrips all other risk factors.”

He and fellow researchers, who call themselves “geroscientists,” are hardly hucksters hawking magic elixirs to extend life. Rather, they are university scientists joined together by the American Federation for Aging Research to promote a new approach to healthier aging, which may — or may not — be accompanied by a longer life. They plan to test one or more substances that have already been studied in animals, and which show initial promise in people, in hopes of finding one that will keep more of us healthier longer.

As Dr. Kirkland wrote in . . ., “Aging: The Longevity Dividend”: “By targeting fundamental aging processes, it may be possible to delay, prevent, alleviate or treat the major age-related chronic disorders as a group instead of one at a time.”

. . .

The team, which includes Dr. Nir Barzilai, director of the Institute for Aging Research at Albert Einstein College of Medicine in The Bronx, and Steven N. Austad, who heads the biology department at the University of Alabama at Birmingham, plans to study one promising compound, a generic drug called metformin already widely used in people with Type 2 diabetes. They will test the drug in a placebo-controlled trial involving 3,000 elderly people to see if it will delay the development or progression of a variety of age-related ailments, including heart disease, cancer and dementia. Their job now is to raise the $50 million or so needed to conduct the study for the five years they expect it will take to determine whether the concept has merit.

. . .

Several studies have . . . found that individuals with exceptional longevity experience a compression of morbidity and spend a smaller percentage of their life being ill, Dr. Barzilai and his colleague Dr. Sofiya Milman wrote in the “Aging” book.

For the full commentary see:

Jane E. Brody. “Pursuing the Dream of Healthy Aging.” The New York Times (Tuesday, February 2, 2016 [sic]): D5.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 1, 2016 [sic], and has the title “Finding a Drug for Healthy Aging.”)

Dr. Kirkland’s co-edited book mentioned above is:

Olshansky, S. Jay, George M. Martin, and James L. Kirkland, eds. Aging: The Longevity Dividend, A Subject Collection from Cold Spring Harbor Perspectives in Medicine. Cold Spring Harbor, NY: Cold Spring Harbor Laboratory Press, 2015.

One study that documents that those who live 107 or more years do not have more years of illness and morbidity (the “compression of morbidity hypothesis”) is:

Sebastiani, Paola, and Thomas T. Perls. “The Genetics of Extreme Longevity: Lessons from the New England Centenarian Study.” Frontiers in Genetics 3 (Nov. 30, 2012).

Arthur Diamond Praises The Bear in “The Bear’s Out-Stuck Neck”

My commentary on The Bear was posted to the American Institute for Economic Research (AIER) web site on Tues., July 9, 2024.

A direct link to the commentary is: https://www.aier.org/article/the-bears-out-stuck-neck/

On Facebook, I added the following comment:

“The Bear has the courage to show a passionate persevering crew of misfit chefs prioritizing merit (the food) over so-called D.E.I. (the color and gender of those who prepare the food). Courage is not the only virtue of The Bear–count also wit, plot, admirable (though flawed) characters, and intelligence. My review applies to seasons 1 and 2, and not as fully to the still-enjoyable season 3 that was posted to Hulu on June 27. At the end of season 3 we are left hanging on whether season 4 will uphold or betray the spirit of the The Bear in seasons 1 and 2.”