Tuesday, August 01, 2017

Anti-Econ 101

"Many of the recommendations for growth and prosperity found in just about any standard 'Econ 101' textbooks are the right place to start ..." (Brynjolfsson and McAfee, 2014, p, 206).

Econ 101 instructs that are always opportunity costs. David Henderson and John Cochrane make the point in "Climate Change Isn't the End of the World ... Even if world temperatures rise, the appropriate policy response is still an open question." Scarcity suggests opportunity costs which call for thinking, deliberation and hard choices. This perplexes the religious left. Here are Henderson and Cochrane:
" Global warming is not even the obvious top environmental threat. Dirty water, dirty air and insect-borne diseases are a far greater problem today for most people world-wide. Habitat loss and human predation are a far greater problem for most animals. Elephants won’t make it to see a warmer climate. Ask them how they would prefer to spend $1 trillion—subsidizing high-speed trains or a human-free park the size of Montana. ...

" ..we need to know what effect proposed policies have and at what cost. Scientific, quantifiable or even vaguely plausible cause-and-effect thinking are missing from much advocacy for policies to reduce carbon emissions. The Intergovernmental Panel on Climate Change’s 'scientific' recommendations, for example, include 'reduced gender inequality and marginalization in other forms,' 'provisioning of adequate housing,' 'cash transfers' and 'awareness raising & integrating into education.' Even if some of these are worthy goals, they are not scientifically valid, cost-benefit-tested policies to cool the planet."  
Elephants, high-speed trains and reduced gender inequality? Opportunity costs.

The LA Times reports that actual construction of the California high-speed train is well underway.  Look for the antithesis of opportunity costs, the misused sunk cost argument: having started the project, we cannot stop because of all that money already spent.

Why does any business ever close its doors? Why is any product line ever shut down? 

How many people use public transit in California? Very few. Here are some 2012 comparisons. New York city is #1 with 229.8 per year per capita. San Francisco is #2 with 131.5. Los Angeles is #15 with 54.9 and most of California is below that. The story has been told a thousand times. (Here is the up-to-date U.S. summary.)  There are too few transit users in California to merit more transit capacity of any kind. Climate change is being used to make bad ideas look not so bad.

Yes. Econ 101 is the anti-politics. Politics is the anti-Econ 101.