Category Archives: Web Article Review

Robert Gordon Revisited

In Robert Gordon’s chapter in the e-book Secular Stagnation: Facts, Causes and Cures, which I reviewed recently, he claims that he never said technological progress is slowing down, but only that future progress will be similar to the rate of the 1970s to now, not the faster rate that happened before the 1970s.

His main argument is that technology will not grow fast enough to offset economic “headwinds”, including population aging, inequality, government debt, and poor education. I don’t deny that these are all problems that we should be trying to address with better policy, and that addressing them would yield benefits. Gordon gives a policy presciption for the U.S. to address them:

My standard list of policy recommendations includes raising the retirement age in line with life expectancy, drastically raising the quotas for legal immigration, legalising drugs and emptying the prisons of non-violent offenders, and learning from Canada how to finance higher education. The US would be a much better place with a medical system as a right of citizenship, a value-added tax to pay for it, a massive tax reform to eliminate the omnipresent loopholes, and an increase in the tax rate on dividends and capital gains back to the 1993-97 Clinton levels.

However, where he doesn’t convince me is his argument that a constant rate of technological progress can’t lead to big gains. If the rate of increase in technology is constant in percentage terms, that means the level of technology is growing exponentially. We are constantly building on the advances of the past. There may be long periods when it seems like nothing is happening, but progress is actually happening behind the scenes, and then it suddenly seems to burst onto the commercial scene. Gordon actually talks about how the technologies that led to very fast productivity growth in the mid-20th century were actually inventions of the late 19th century (electricity, the telephone, etc.). It took a few decades for the technology to kick into everyday life. The 1970s to the present have been a time of huge advance in computer technology, so even if the lag times are not decreasing it should be about time for that to kick in. Biotechnology would be another couple decades behind, since the big advances in genomics started to happen in the 1990s. But there are reasons to be hopeful that the lag time between advances tends to decrease over time. So technology may be increasing not only at a constant percentage rate, which means exponential growth, but the rate of exponential growth itself may be accelerating. Ultimately, this lag time determines whether we are in for a lost decade or two as Gordon’s “headwinds” kick in before the next wave of technology-driven improvement. Of course, Gordon like most economists leaves out some other possible headwinds such as climate change, energy, and food, not to mention the really bad stuff like wars and pandemics.

Donella Meadows

Here is Donella Meadows explaining how your bathtub is like your bank account.

If you’re about to take a bath, you have a desired water level in mind. You plug the drain, turn on the faucet and watch until the water rises to your chosen level (until the discrepancy between the desired and the actual state of the system is zero). Then you turn the water off.

If you start to get in the bath and discover that you’ve underestimated your volume and are about to produce an overflow, you can open the drain for awhile, until the water goes down to your desired level.

Those are two negative feedback loops, or correcting loops, one controlling the inflow, one controlling the outflow, either or both of which you can use to bring the water level to your goal. Notice that the goal and the feedback connections are not visible in the system. If you were an extraterrestrial trying to figure out why the tub fills and empties, it would take awhile to figure out that there’s an invisible goal and a discrepancy-measuring process going on in the head of the creature manipulating the faucets. But if you watched long enough, you could figure that out.

Very simple so far. Now let’s take into account that you have two taps, a hot and a cold, and that you’re also adjusting for another system state — temperature. Suppose the hot inflow is connected to a boiler way down in the basement, four floors below, so it doesn’t respond quickly. And you’re making faces at yourself in the mirror and not paying close attention to the water level. And, of course, the inflow pipe is connected to a reservoir somewhere, which is connected to the whole planetary hydrological cycle. The system begins to get complex, and realistic, and interesting.

Mentally change the bathtub into your checking account. Write checks, make deposits, add a faucet that keeps dribbling in a little interest and a special drain that sucks your balance even drier if it ever goes dry. Attach your account to a thousand others and let the bank create loans as a function of your combined and fluctuating deposits, link a thousand of those banks into a federal reserve system — and you begin to see how simple stocks and flows, plumbed together, make up systems way too complex to figure out.

mandatory urban water restrictions in California

According to NPR, the drought in California is leading to mandatory water restrictions in urban areas.

  • A reduction in water use by 25 percent for California cities and towns.
  • New pricing structures by local water agencies to encourage conservation.
  • Replacement of 50 million square feet of lawns throughout California with “drought tolerant landscaping.”
  • Rebates for water-efficient appliances.
  • New reporting guidelines for agricultural water users.

According to Slate, urban areas and industry together make up about 20% if water use in California. Agriculture makes up the other 80%.

Lee Kuan Yew

Lee Kuan Yew, the founder and long-time leader of modern Singapore, passed away on March 23. I regret I never saw him in person, but I did live in Singapore from 2010-13 and read his memoir From Third World to First. His accomplishments are extraordinary whatever you think of him. The western press is a little unfair in constantly calling him an “autocrat”. It’s true that he outlawed short skirts and long hair for a time, censored foreign publications, and locked up a few Communists for decades without a proper trial. But that was the Cold War, and before you judge, you have to consider the utter chaos and climate of fear that was going on all around Singapore in Indonesia, Malaysia, Vietnam, Korea, China, and pretty much the rest of Asia at the time. Singapore stayed relatively calm, peaceful, safe, and eventually became prosperous on his watch. Singapore has a parliament with regular elections. They are dominated by one party that only considers a narrow range of policies, partly because that party is popular and has served the people well, and partly because there are strong barriers to entry built into the system for opposition parties that might consider a wider range of policies. But replace that one party with two parties that are only slightly apart on the narrow range of policies they consider, keep the barriers to entry, and you have the U.S. system.

Economically, Singapore took full advantage of its critical location in the global shipping network. They focused on foreign direct investment to build industry first in low wage manufacturing, and gradually built up to advanced industries today such as refining, chemicals, drugs, technology, finance, etc. They have something called the “central provident fund” – this is a personal social security account that people save their money in (it’s not optional) for retirement, housing, and medical care. This money gets invested in the local and global economies and earns a good rate of return. Almost all housing is developed by the government and subsidized – but it is not exactly “public housing” as we think of it in the U.S., because it is owned rather than rented. So it’s more like a condo where the government is your condo association. You can buy your first unit at a discount to the market price, then resell it later at the market price, although the government puts some limits on who can buy where and when. So the combination of this housing scheme and savings scheme has built a fairly broad base of wealth for the population without resorting to a large income redistribution or social insurance scheme like we see in Europe and the Anglo-American countries. Lee famously believed that this would be counter to “Asian values”, part of which is maintaining very tight family units that take care of each other in times of need.

Although I enjoyed my personal time in Singapore, it was a little too cold and corporate for my taste. Too many people seemed to view accumulating wealth and designer handbags as the primary objective of everyday life. Although I agree that people were tolerant of religious and ethnic diversity, I perceived a coldness between strangers on the street, and even between neighbors, that I found disturbing compared to the way people treat each other in the U.S. and elsewhere in Southeast Asia. People sometimes expressed petty racial and class-based attitudes that would at least engender some guilt in other places. Sometimes I felt that Singaporeans have allowed themselves to become the perfect example of the new Homo economicus species described in the economics textbooks. The country also has some demographic challenges – fertility rates are low partly because women have so many more career and life options available to them than in the past. This is great, but because Singapore is so small it is going to mean a dramatic drop in the native-born population. Immigration can compensate in terms of numbers, but the culture and sense of nationhood will somehow have to adjust to this. A shared love of designer handbags is not a good cultural foundation for a nation.

Singapore has an unbelievable PR machine. You should assume that things there are never quite as rosy as the propaganda they put out, nor as bad as the western press sometimes accuses. Regardless, it is pretty amazing to think how far it has come since the ashes of World War II, and hard to point to another figure who has created a prosperous modern country through sheer force of will like Lee Kuan Yew.

Donald Shoup retirement

Here is a nice tribute to Donald Shoup, who is retiring from the University of California.

Shoup’s most notable contribution to America’s planning landscape is in highlighting the consequences of underpricing parking. In The High Cost of Free Parking, he demonstrated that minimum parking requirements artificially inflate building costs by adding the costs of accommodating parked cars to new development and then giving away those benefits to drivers who park for free. These costs can be substantial: As Shoup has pointed out repeatedly, free parking at work is often worth more than if employers filled up their workers’ gas tanks. Shoup highlighted the true price of this invisible subsidy and unveiled new ways for city planners to encourage public transit use and address environmental concerns.

As technology evolved, Shoup folded new innovations into his ideas. In April 2011 San Francisco launched SFpark, a system based on Shoup’s work that adapts the price of street parking spaces to match demand. Adjustments according to time of day, location and day of the week allow smart parking meters to change their prices, with a target of keeping 15% of spaces vacant on any block. Drivers searching for parking can use their smartphones to find a space at a distance from their destination at a price they’re willing to pay. By more closely matching the price of a space with demand, drivers waste less time and fuel circling the block looking for a spot to park. The system has helped the city manage meter occupancy effectively and has reduced circling for parking by 50%, according to a 2014 study, and “smart parking” programs are appearing in Los Angeles and other cities. “His ideas have largely defined what is considered best practice for much of the field of parking management, ideas that increasingly are being put in place in cities around the world,” SFpark program director Jay Primus says.

Removing parking minimums from the zoning code seems like such an easy, obvious step. But what causes political opposition, at least where I live, is the perception that if new developments are built without parking, then people will just buy cars anyway and crowd out on-street spaces for people who already live there. I don’t necessarily buy this. If parking is truly valuable to people, they should be willing to pay more for a development that includes a parking space. If they are not doing this, it tells us that the demand for parking is not actually there. If they can walk safely to work, school, and shopping, and parking is expensive, many people will make the choice not to own cars, especially with options like car share and Uber becoming more accessible every day. Where I live, this is definitely happening.

There is something else happening where I live though. On-street parking is incredibly cheap, and as a result there is more demand for it than supply. People feel incredibly indignant about this, which makes it politically very difficult to limit parking or raise parking prices. There is a legitimate argument that if you raise parking prices, the rich will be able to have cars and the poor will not. If the city provided excellent walking, biking, and public transportation in all neighborhoods though, this would not be a problem.

So here is my solution, right out of an economics textbook: completely deregulate parking prices so it is all market all the time, including street spaces. You might want to do this gradually and limit the fluctuations that can occur, just so it doesn’t get too crazy. Then take the public revenues, tax the private revenues, and invest the proceeds dollar for dollar in pedestrian infrastructure, bike infrastructure, and public transportation, making sure the benefits are highly visible in neighborhoods that need them most. To do this you probably need a single unified agency or authority in charge of parking and all modes of transportation, and under the control of local leaders with some guts. There are a few more policies that might nudge the system even more, like property taxes and stormwater fees that discourage land speculators from turning vacant lots into parking and holding onto them for decades.

Mr. Money Mustache Strikes Again

My last post on Mr. Money Mustache has proven to be popular. Now he’s back with everything you could want to know about home energy efficiency. For example, how to monitor you energy use:

The Efergy Elite Combo system comes with a very small wireless clamp that sits permanently around the main input wires in my circuit panel and measures power consumption right down to the watt with 10 second resolution. You set it and forget it. This power consumption is then displayed on a wireless unit in my kitchen and also logged permanently online, where I can review graphs from my phone or computer…

By watching the display, I can see how much power it takes it takes when the fridge kicks on, or when I run the dishwasher, or flip on a bank of lights in the kitchen. It also helps me find phantom loads: when you think everything is off, but your household consumption is still over 100 watts, something is wrong. I tracked down three faulty smoke detectors that were burning over 5 watts each and replaced them with units that use under 1 watt. Then I discovered that my Yamaha amplifiers burn 25 watts each if you leave them on, even when there is no music playing. This was bad, because I was often forgetting them overnight.

The benefit of the Efergy is its ability to measure even direct-wired devices: alarms, dishwashers, your central a/c system, or the unwanted pipe heater that the previous owner installed in your crawlspace to prevent frozen pipes.. but then left on for 12 months of the year regardless of temperature (which would cost you $1902 per decade, in case you were curious).

electric indoor compost bin

I’m upset, because I was going to invent this.

Oh well, I suppose I didn’t really have time to invent it, or know how to do it. If it really works as well as advertised, it’s potentially a big advance in closing the loop.

I have to point out that aerobic compost won’t actually reduce carbon emissions compared to landfilling the same waste or putting it down the garbage disposal. But the carbon is the same carbon absorbed when the plants were grown, and in this case you haven’t produced waste at all, but instead turned the carbon and nutrients in your groceries into healthy soil and plants on your own property. You’ve saved a few trips to the Home Depot, which means you saved energy and reduced pollution from the gasoline you would have put in your car, reduced your risk of injury or death in a car crash, reduced the amount of chemical fertilizer produced in natural gas refineries and phosphate mining operations, reduced energy required to truck bags of topsoil and fertilizer around, reduced the risk of death and injury that entails, diverted nutrients from surface water or groundwater (where they are pollution) to your soil (where they are a resource), maybe grown some food, gotten some exercise and squeezed in some precious leisure time out in the garden. Or maybe you gave some compost away, made a friend or even sold the stuff. If there are enough people like you, Home Depot may not need to have such a big parking lot, which would reduce stormwater runoff, urban heat, demand for pavement (which really will reduce carbon emissions), and open up land for more economically or ecologically productive or leisurely uses.

gene editing

Here is a long article in MIT Technology Review about gene editing.

“Germ line” is biologists’ jargon for the egg and sperm, which combine to form an embryo. By editing the DNA of these cells or the embryo itself, it could be possible to correct disease genes and to pass those genetic fixes on to future generations. Such a technology could be used to rid families of scourges like cystic fibrosis. It might also be possible to install genes that offer lifelong protection against infection, Alzheimer’s, and, Yang told me, maybe the effects of aging. These would be history-making medical advances that could be as important to this century as vaccines were to the last.

That’s the promise. The fear is that germ-line engineering is a path toward a dystopia of superpeople and designer babies for those who can afford it. Want a child with blue eyes and blond hair? Why not design a highly intelligent group of people who could be tomorrow’s leaders and scientists?…

All this means that germ-line engineering is much farther along than anyone imagined. “What you are talking about is a major issue for all humanity,” says Merle Berger, one of the founders of Boston IVF, a network of fertility clinics that is among the largest in the world and helps more than a thousand women get pregnant each year. “It would be the biggest thing that ever happened in our field,” he says. Berger predicts that repairing genes for serious inherited disease will win wide public acceptance, but beyond that, the technology would cause a public uproar because “everyone would want the perfect child” and it could lead to picking and choosing eye color and eventually intelligence. “These are things we talk about all the time,” he says. “But we have never had the opportunity to do it.”

How far out are practical applications in humans? Reading farther down, some are saying 10-20 years.