Author Archives: rdmyers75@hotmail.com

world economic slowdown

Here’s a laundry list of world economic problems from CBS News:

The focused has been on Germany over the past week, the weakly beating heart of the still-troubled eurozone, where industrial production, factory orders and export activity all posted the worst results since early 2009 amid chatter that the country is on the verge of falling back into a technical recession.

Separately, France is having budget woes. And the eurozone debt crisis threatens a comeback as credit rating agencies issue new warnings and the market starts to realize that the European Central Bank can no longer bluff its way out of trouble. It now must step up with a bona fide sovereign bond-buying stimulus program (which could be illegal according to its charter and is unpopular idea with the Germans) after playing at one for more than two years.

Japan is also at risk of falling back into technical recession (GDP growth already contracted last quarter) as a recent sales tax hike and the negative impact of a very weak yen (higher food, fuel and import costs) pinches consumers.

Japan has been held together by the idea that the Bank of Japan would issue more cheap money stimulus and further slam the yen if the economy faltered. But economists are realizing that a weak yen is hurting more than it’s helping at this point. And given Japan’s massive 227% national debt-to-GDP ratio (vs. around 100% for the U.S.) time is running out.

And in China, the People’s Bank of China is watching as electricity production contracts outright for the first time since early 2009, an anecdotal sign that China’s economy has hit a wall.

The second reason is that the U.S. Federal Reserve is watching as its efforts to merely return monetary policy to a more neutral footing — by bringing to an end the QE3 bond-buying program and looking ahead to the first interest rate hike since 2006 — has resulted in a volatile corporate bond market and a massive rally in the U.S. dollar.

This has crushed commodity prices, tightened credit to foreign economies (many of which have grown dependent on borrowing at low rates in cheap dollars) and threatens to slow U.S. GDP growth by pinching American exports.

It goes on after that…

No mention of root causes here. I keep repeating myself all the time redundantly but some potential root causes, which are not mutually exclusive are (1) the world is still feeling effects of the 2007-8 financial crisis, in a classic depression and loss of demand and confidence scenario, (2) rich people and corporations are driving government policy in their favor to the point that inequality has gotten so bad it has broken our economic system, with the middle class and working class not having enough incentive (i.e. income) to be productive, (3) technology and automation are putting strong downward pressure on middle class and working class wages, (4) climate change and natural capital depletion are starting to be felt in energy and food prices, putting a head wind on economic growth, with “green” technological progress not enough to lessen or reverse environmental impacts, or (5) innovation and technological progress in general have slowed down and are not driving economic growth like they have over the past century or so.

freezing eggs

It’s becoming more common to freeze human eggs. The implications are interesting. A woman can freeze eggs when she is young for later use, obviously. What if a young woman learns that she is not able to have children? Could she choose to be implanted with eggs her sister has frozen? Sure, that seems okay. What about eggs her mother chose to freeze decades earlier? The baby could be someone’s daughter and granddaughter at the same time. But still just a baby. I imagine these things will all happen within families, if they haven’t already. What about buying and selling eggs though? What about a couple paying a stranger to have their genetic child because they are just too busy or don’t want to be bothered with a pregnancy. That’s slightly more troubling, but I’m sure that too will happen if it hasn’t already.

visualization

Solomon Messing has a pretty good article on data visualization and communicating scientific information, focusing on the ideas of Tufte and Cleveland. I like the idea that there is a science of what our brains can most easily process, and not just a need to create visual infotainment because we have lost our ability to concentrate on anything else. I’m not quite ready to give up on stacked bar charts in all cases.

When most people think about visualization, they think first of Edward Tufte.  Tufte emphasizes integrity to the data, showing relationships between phenomena, and above all else aesthetic minimalism.  I appreciate his ruthless crusade against chart junk and pie charts (nice quote from Data without Borders). We share an affinity for multipanel plotting approaches, which he calls “small multiples,” (thanks to Rebecca Weiss for pointing this out) though I think people give Tufte too much credit for their invention—both juiceanalytics and infovis-wiki write that Cleveland introduced the concept/principle. However, both Cleveland and Tufte published books in 1983 discussing the use of multipanel displays; David Smith over at Revolutions writes that “the “small-multiples” principle of data visualization [was] pioneered by Cleveland and popularized in Tufte’s first book”; and the earliest reference to a work containing multipanel displays I could find was published *long* before Tufte’s 1983 work–Seder, Leonard (1950), “Diagnosis with Diagrams—Part I”, Industrial Quality Control (New York, New York: American Society for Quality Control) 7 (1): 11–19.

I’m less sure about Tufte’s advice to always show axes starting at zero, which can make comparison between two groups difficult, and to “show causality,” which can end up misleading your readers.  Of course, the visualizations on display in the glossy pages of Tufte’s books are beautiful–they belong  in a museum.  But while his books are full of general advice that we should all keep in mind when creating plots, he does not put forth a theory of what works and what doesn’t when trying to visualize data.

Cleveland (with Robert McGill) develops such a theory and subjects it to rigorous scientific testing. In my last post I linked to one of Cleveland’s studies showing that dots (or bars) aligned on the same scale are indeed the best visualization to convey a series of numerical estimates.  In this work, Cleveland examined how accurately our visual system can process visual elements or “perceptual units” representing underlying data.  These elements include markers aligned on the same scale (e.g., dot plots, scatterplots, ordinary bar charts), the length of lines that are not aligned on the same scale (e.g., stacked bar plots), area (pie charts and mosaic plots), angles (also pie charts), shading/color, volume, curvature, and direction.

I’m slowly getting on board. I’ve given up pie charts in most cases. I’m not ready to give up stacked bar charts in all cases – I think they serve a purpose. Microscopic multi-panel charts still make my head spin sometimes, although if they were interactive and I could click on one panel to blow it up, that would be cool. There is one thing I am sure he is right about though, which is that the first step to serious analysis and visualization is to leave Excel behind.

National Geographic on the California drought

Here is National Geographic weighing in on snowpack, drought, and climate change in the western U.S.:

As in most of the rest of the American West, fortunes depend less on how much precipitation falls from the sky than how much of it falls as snow and how long that snow stays in the mountains. Despite the occasional severe winters, western snowpacks have declined in recent decades, and key researchers expect the trend to accelerate. “Warmer winters are reducing the amount of snow stored in the mountains, and they’re causing snowpacks to melt earlier in the spring,” says Philip Mote, director of the Oregon Climate Change Research Institute at Oregon State University. Shrinking snowpacks and earlier snowmelts mean—in practical terms—that the region faces a persistent and worsening drought.

They talk about the parallels with Australia, which has faced similar issues and seemingly handled them better:

Australia’s Big Dry, a decade-long drought that began around the start of this century, led at first to the same kind of political bickering heard recently in California. But after years of environmental destruction, urban water stress, and great suffering by many dryland farmers, Australian politicians—and farmers—took some serious risks. “At the peak of the drought, it became very apparent that the environment doesn’t lie,” says Mike Young, a professor at the University of Adelaide who was active in the country’s drought response. Australia reduced urban water use by investing billions in conservation, education, and efficiency improvements. Most important, it began to reform the old water allocation system, which, like California’s, had promised specific amounts of water to rights holders. The country instituted a system that guaranteed a minimum supply of water for the environment, then divided the remainder into shares that could be quickly sold and traded—or stored for the next season. Farmers fought the changes, but with a financial incentive to use less water, they soon got more creative and more efficient. Water use dropped, and though consumption has risen since the drought eased in 2010, it remains below pre-drought levels in towns and cities.

I wonder if any other cultures have ever dealt with something like this. From Wikipedia:

Ancient Pueblo peoples, Ancestral Pueblo peoples, or Ancestral Puebloans were an ancient Native American culture centered on the present-day Four Corners area of the United States, comprising southern Utah, northeastern Arizona, northern New Mexico, and southwestern Colorado.[1] They lived in a range of structures, including pit houses, pueblos, and cliff dwellings designed so that they could lift entry ladders during enemy attacks, which provided security. Archaeologists sometimes refer to the unique set of material culture remains as “Anasazi”, although the term is not preferred by contemporary Pueblo peoples and often loosely used as a name for the occupants…

After approximately 1150, North America experienced significant climatic change in the form of a 300-year drought called the Great Drought. This also led to the collapse of the Tiwanaku civilization around Lake Titicaca in present-day Bolivia.[22] The contemporary Mississippian culture also collapsed during this period…

In this later period, the Pueblo II became more self-contained, decreasing trade and interaction with more distant communities. Southwest farmers developed irrigation techniques appropriate to seasonal rainfall, including soil and water control features such as check dams and terraces. The population of the region continued to be mobile, abandoning settlements and fields under adverse conditions. Along with the change in precipitation patterns, there was a drop in water table levels due to a different cycle unrelated to rainfall. This forced the abandonment of settlements in the more arid or over-farmed locations.[citation needed]

Evidence suggests a profound change in religion in this period. Chacoan and other structures constructed originally along astronomical alignments, and thought to have served important ceremonial purposes to the culture, were systematically dismantled. Doorways were sealed with rock and mortar. Kiva walls show marks from great fires set within them, which probably required removal of the massive roof – a task which would require significant effort. Habitations were abandoned, tribes split and divided and resettled far elsewhere.

Uh oh, so it looks like times got a little crazy, and people started burning stuff down. Hopefully we can do better than this. From what I know, this was a fairly urban, densely settled, agricultural civilization. When water got scarce, they probably just dispersed. Back then, there was a fair amount of open space to disperse in. I’m not so sure that is going to work for us, unless we are talking about spaceships.

By the way, if you happen to be interested in a story where a whole civilization goes crazy and starts burning shit down, try this:
Nightfall

By the way, this is a novel based on a short story old enough to be in the public domain, which someone has posted online here.

self-driving cars and urban form

Next City has a couple good articles about what self-driving cars may mean for land use and urban form.

How will roadways, sidewalks, intersections, signage, traffic signals, and the relationship between buildings, roadways, pedestrians, cyclists, and vehicles change?

The answer to that question is in picture form, so you have to click on the link to see it. The second article explains it in words:

There is much to recommend in this imagined world of cheap, ubiquitous drone taxis. This is a world where senior citizens, the disabled, young people and the inebriated can enjoy safer mobility and be freed from the enormous costs of owning and insuring a car. It’s also a world wherein parked cars have a smaller footprint. In 2010, researchers at the University of California, Berkley released a study on the country’s parking infrastructure. While conceding that assessments of the number of parking paces have varied significantly, they cited a series of estimates, from which we can draw a reasonable range. Following this data, current parking codes have made it so there are between three and eight parking spaces for each of the 250 million cars in America. Think about it this way: If the number of personal cars dropped and parking provisions were loosened, as many as 675 million parking spaces, particularly those in urban cores, could be turned into something else — housing, parks or a million other uses more desirable than street-deadening parking lots.

“If you could push all the land currently devoted to parking in Manhattan and Boston and other big cities 10 minutes outside the city limits,” says Anthony Townsend, author of Smart Cities, “you’re potentially talking about trillions of dollars worth of real estate that could be developed, and tens of millions of new city-dwellers who could be accommodated.”

Well, sure we can turn some of it into homes and businesses. But let’s turn some of it into parks and habitat and even farms too.

a rambling post on oil prices, France, and U.S. health care

I said recently that I didn’t think oil prices would continue to decline much below $100 a barrel. Well, today (October 10 as I write) West Texas Intermediate is at $85.82 and Brent Crude at $90.21. An article I linked to recently said that fracking is cost-effective right now when oil stays above about $60.

In other economic news, U.S. health care cost growth is significantly down and it seems like that trend might continue. And France’s economy might be in trouble.

What do all these trends mean taken together? I have no idea, but I can speculate as well as anyone. Europe has been stagnant and is staying that way. Growth and energy demand are slowing in Asia too, exactly when U.S. oil and gas production are booming. Maybe solar panels are starting to take a bite out of the natural gas market? Probably not yet, but that will happen.

The U.S. health care system is an extraordinarily complex and inefficient market that nobody truly understands. There are some signs it may finally be getting a little more efficient. I think this may be one reason the U.S. looks like a bright spot in the overall lackluster world economy right now.

 

GDP and child mortality

In this 2007 TED talk, Hans Rosling compares GDP and child mortality rates between countries over long periods of time. He makes some interesting comparisons – today’s “developing” or “emerging” countries have GDP similar to the U.S. about a hundred years ago (all adjusted for inflation and purchasing power, I assume), but they are much more advanced in terms of health and living standards than the U.S. was then. By animating over time, you can see how the catching up process occurred particularly after World War II. These plots are interesting because they show child mortality and GDP in two dimensions, but then use colors and bubbles to add various third variables like education level or carbon emissions.

I have to critique a little bit, I can’t help it. He mentions that GDP growth statistically explains 80% of the gains in child mortality. I accept the statistics, but I don’t think GDP growth is logically the cause of these gains. I suspect there are a couple key technologies, vaccination and water disinfection, that can probably explain a lot of the trend, and the discovery of these technologies happened to occur at a certain time in history. 100 years ago, when the U.S. was passing a threshold to join the club of truly wealth countries, we were in the early stages of discovering and implementing these trends. Today, when countries in Asia and South America are joining the club, these technologies are well established. So it’s not just about wealth, it’s about where we are at a particular moment of history. Logically, there can be periods where the world makes large gains in quality of life without equally large increases in financial wealth, and also the opposite.

“management flight simulators”

MIT has posted some free “management flight simulators” (aka games) online. It didn’t sound that interesting to me until I noticed that one of them is the “fish banks” game originally developed by Dennis Meadows who, I now recall, was from MIT. Other games simulate a clean energy startup and climate change negotiations.

LED lightbulbs

There is officially no reason not to be buying LED lightbulbs now. The purchase price is no longer higher than other types of bulbs, and the operating cost is much lower. NPR has nice charts that make all this pretty clear.

Now, normally I don’t link to products other than books on this site, but I’ve been buying these and replacing older bulbs as they burn out, and so far I am happy with them:

the sharing economy

In an IGM Forum poll of whether economists agree or strongly agree that services like Uber and Lyft are good for the economy, only 56% strongly agreed. The other 37% only agreed. (Some didn’t respond.) Meanwhile, the Guardian has printed an op-ed by one grumpy old man who hates the sharing economy:

Given vast youth unemployment, stagnating incomes, and skyrocketing property prices, today’s sharing economy functions as something of a magic wand. Those who already own something can survive by monetising their discomfort: for example, they can earn cash by occasionally renting out their apartments and staying with relatives instead. Those who own nothing, on the other hand, also get to occasionally enjoy a glimpse of the good life – built entirely on goods they do not own.

You don’t get it, grumpy old man. If the knowledge that you own an object sitting in your basement or garage gives you some feeling of pleasure or status, then more power to you and nobody should take that away from you. But for most people, I don’t think it does. The point is to get the same utility out of less stuff taking up less space. Cars are a particularly important example, because they take up such enormous amounts of space when most of them are just sitting there most of the time.