Category Archives: Web Article Review

bond ratings and climate change

Even if the U.S. federal government officially doesn’t believe in climate change, the municipal bond industry officially does believe in climate change.

In a report to its clients Tuesday, Moody’s Investors Service Inc. explained how it incorporates climate change into its credit ratings for state and local bonds. If cities and states don’t deal with risks from surging seas or intense storms, they are at greater risk of default…

In its report, Moody’s lists six indicators it uses “to assess the exposure and overall susceptibility of U.S. states to the physical effects of climate change.” They include the share of economic activity that comes from coastal areas, hurricane and extreme-weather damage as a share of the economy, and the share of homes in a flood plain…

Bloomberg News reported in May that towns and counties were able to secure AAA ratings despite their risks of flooding and other destruction from storms, which are likely to be more frequent and intense because of climate change. If repeated storms and floods are likely to send property values — and tax revenue — sinking while spending on sea walls, storm drains or flood-resistant buildings goes up, investors say bond buyers should be warned.

the CFPB

Simon Johnson says the Consumer Financial Protection Bureau has actually been doing a good job up until now of, well, protecting consumer finances.

The CFPB was established by the 2010 Dodd-Frank financial-reform legislation to do exactly what its name implies: protect consumers in their various financial transactions. A new agency was needed because existing regulators, including the Board of Governors of the Federal Reserve System, had manifestly and repeatedly failed to protect consumers from abuses, such as deceptive and fraudulent mortgage-lending practices, some of which were at the heart of what went wrong in 2007-08.

As Elizabeth Warren (then a consumer advocate, now a US senator from Massachusetts) powerfully pointed out, there was a lot more protection for people buying toasters than for someone taking out a 25-year mortgage. Finance is complex, and a lot of devils could be, and were, hidden in the details. The CFPB was designed, above all, to bring greater transparency to consumers’ financial transactions – actually a very pro-market contribution.

And the CFPB has done exactly what Congress designed it to do. So far, the Bureau has arranged for the return of almost $12 billion to 29 million consumers. At the same time, banks are reporting record profits – on the order of $171 billion, according to the latest data. The CFPB is good for business, or at least for the straightforward, transparent business of traditional lending.

Unfortunately, all this seems likely to end as Trump has appointed someone to head the agency who is actually against the agency’s existence, not unlike his approach to the environment, housing, and education. Johnson seems to think the public will catch on to this and punish the Republicans politically when the little guy starts to get hurt by it. I don’t know, it probably depends on the timing. Nobody wants to see another financial blow-up, but if it has to happen mid-2020 seems as good a time as any.

Google Scholar, Microsoft Academic, and open science

Wired talks about how Google Scholar is changing the academic publishing industry as open science starts to take hold, and how Microsoft Academic might be an even better search engine. There are also a lot of other emerging search engines out there, which the article goes into.

I use Google Scholar quite a bit, even though Google sort of stopped advertising it and makes you go through a couple extra clicks to get to it. I didn’t know Microsoft Academic or most of these other tools existed.

macroeconomic models and tax cuts

The Economist has a piece on macroeconomic models used to evaluate tax policy.

Lurk near PhD economists online or at conferences, and you will hear them talk about “crisis in macro”. They mean that the models and assumptions most dominant among macroeconomists have failed repeatedly since 2007 to predict or even describe what’s happening. A defence, popular among academics, goes like this: we did get it wrong, but as responsible social scientists, we’re busy and fascinated right now, trying to figure out what was broken and how to fix it. It is a fair defence. In particular young macroeconomists have been using bigger datasets and faster computers to more accurately predict human behaviour. Economists are more likely to accept now, for example, that people with and without access to credit or wealth react differently to the same policy, an idea that is slowly working its way into models at central banks and even at the Joint Committee on Taxation.

This progress is unfortunate for Republicans. In the 1990s social science was on their side. Because data and computing power were harder to come by, macroeconomic models relied on thought experiments. The seminal model showing the ideal capital-gains tax rate as zero, for example, dates to 1986. It assumes that the economy consists of only one person. Also, she is immortal. The Wonder Woman economy, if you will. That model is now interesting only for a lecture on the history of economic thought. We’ve moved on, macroeconomists protest. But economists have. And Republicans haven’t…

But if you are going to insist on modeling the future and then planning around it, you have to do it right. The economists at the Joint Committee on Taxation are thoughtful. They read the most recent research. They examine their own models and, when they can, update them—conservatively. If, as Republicans have been insisting for 20 years, we have to assess our tax policies with dynamic scoring, there is no better way to do it than through the JCT. Unfortunately, as modeling has improved, it has not improved in the direction Republicans prefer, which leaves them where they are now. They wanted social science in policy-making, and they got it, in the form of a $1trn tax bill.

I don’t know how any ethical person can support the Republican party right now. They don’t care about facts, logic, or evidence, and certainly not economic growth or raising the living standards of their constituents. They are blantantly and shamelessly committed to lining the pockets of their big-business funders. It’s corrupt, undemocratic and shameful.

more on space bacteria

Russian cosmonauts are claiming they have found bacteria on the outside of the International Space Station that have to have come from space. At least, they didn’t get on the ISS until the ISS was in space, meaning they already had to be there. Reading between the lines, that doesn’t mean the bacteria didn’t make their way from Earth to space at some point in the past, before the ISS was launched.

I wonder if harmless bacteria could go into space, mutate into something dangerous, then make their way back to Earth on a returning spacecraft. Has that story ever been done?

But The Andromeda Strain had a lame ending, as I recall.

we’re #1…in road deaths in the industrialized world

It’s not just health care costs, life expectancy, infant mortality, education, drug addiction and infrastructure. As more evidence the U.S. is gradually slipping behind the rest of the developed world in many areas, here is a New York Times article on how road deaths are worse here than our peer countries in terms of wealth. And not just western Europe, but again our close cultural and historical cousins like Canada and Australia.

It didn’t used to be this way. A generation ago, driving in the United States was relatively safe. Fatality rates here in 1990 were roughly 10 percent lower than in Canada and Australia, two other affluent nations with a lot of open road.

Over the last few decades, however, other countries have embarked on evidence-based campaigns to reduce vehicle crashes. The United States has not. The fatality rate has still fallen here, thanks partly to safer vehicles, but it’s fallen far less than anywhere else.

As a result, this country has turned into a disturbing outlier. Our vehicle fatality rate is about 40 percent higher than Canada’s or Australia’s. The comparison with Slovenia is embarrassing. In 1990, its death rate was more than five times as high as ours. Today, the Slovenians have safer roads.

Let’s not set our sights too high – could we start by just making America average again? Let’s try to catch up to our peers with similar levels of wealth and technology, instead of continuing to slip further behind. Or we could just bury our heads in the sand, not learn about the world, let our politicians tell us how great we are, and never find out that there could have been a better way.

Goering on Propaganda

An article on History News Network has this disturbing quote from Hermann Goering:

The Nazis fundamentally understood that public opinion was merely something that could be manufactured: propaganda would make people believe anything the regime wanted them to. As Reichsmarshal Goering told the Nuremberg Tribunal: “it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in every country.”

Blame the Jews, the Communists, the Mexicans, the Muslims, the Koreans, the Chinese, the Russians, the atheists, anything to avoid looking internally for real causes of and real solutions to complex probems.

ice apocalypse

So will it be fire or ice that gets us. Eric Holthaus, writing in Grist, says ice.

The glaciers of Pine Island Bay are two of the largest and fastest-melting in Antarctica. (A Rolling Stone feature earlier this year dubbed Thwaites “The Doomsday Glacier.”) Together, they act as a plug holding back enough ice to pour 11 feet of sea-level rise into the world’s oceans — an amount that would submerge every coastal city on the planet. For that reason, finding out how fast these glaciers will collapse is one of the most important scientific questions in the world today…

In the past few years, scientists have identified marine ice-cliff instability as a feedback loop that could kickstart the disintegration of the entire West Antarctic ice sheet this century — much more quickly than previously thought.

Minute-by-minute, huge skyscraper-sized shards of ice cliffs would crumble into the sea, as tall as the Statue of Liberty and as deep underwater as the height of the Empire State Building. The result: a global catastrophe the likes of which we’ve never seen.

I enjoy Eric’s writing. He employs some hyperbole, but always links to original sources you can drill into if you want to. Regarding the hyperbole though, here is some criticism of him in the Guardian:

I was particularly concerned about some of the implied time scales and impacts. That ‘slowly burying every shoreline…creating hundreds of millions of climate refugees…could play out in a mere 20 to 50 years’ (it could begin then, but would take far longer). That ‘the full 11 feet’ could be unlocked by 2100 (Rob and Dave predicted the middle of next century). That cities will be ‘wiped off the map’ (we will adapt, because the costs of protecting coastlines are predicted to be far less than those of flooding). We absolutely should be concerned about climate risks, and reduce them. But black-and-white thinking and over-simplification don’t help with risk management, they hinder.

Is “the entire scientific community [in] emergency mode”? We are cautious, and trying to learn more. Climate prediction is a strange game. It takes decades to test our predictions, so society must make decisions with the best evidence but always under uncertainty. I understand why a US-based climate scientist would feel particularly pessimistic. But we have to take care not to talk about the apocalypse as if it were inevitable.

Maybe, but if the cost of protecting cities is less than the cost of flooding, perhaps our U.S. politicians could get to work on that instead of continuing to bury their heads in the sand and pretend science doesn’t exist, even if the time frame is uncertain. Remember the serious scientists are arguing here over whether the most likely scenario is the one that has been presented over the past few years, or something worse. They are not arguing that it might actually be better than they thought.

North Korea and biological weapons

Harvard Kennedy School has a new report on North Korea and biological weapons. It is not as alarming as it maybe could be. They almost certainly have the ability to produce them, as does any country, company, or institution with modern agricultural technology. There is no clear evidence that they have made a large-scale attempt to weaponize or deploy them.