Now, Ritholtz knows much more about economics than I do, and I’m definitely not trying to downplay the significance of the current bailout, which is so large that it seems to devalue the idea of money itself.  But I don’t think he’s doing enough to compare the bailout to historical expenditures.

Ezra Klein at the American Prospect makes two good points about this, by first showing how, unlike most of the other previous expenditures, most bailout dollars are loans which should, to a large degree, get repaid (evenutally; hopefully). Also, and more along the lines of what I’d been thinking about, he makes the point that the U.S. is much, much larger than it was back in mid-twentieth century, and can therefore borrow more for these kinds of expenditures. I’d like to add to that second point and point out that Ritholtz should have compared these different expenditures to the U.S.’s GDP at the different points in time in which they occured.

For example, using a nifty little online tool by Louis D. Johnston and Samuel H. Williamson we can calculate GDPs from different time periods in the U.S. since 1790. The results for each year can be calculated for nominal GDP, real GDP, nominal GDP per capita and real GDP per capita. If we take the real GDP per capita for 1938 ($7,256) and compare it to real GDP per capita for 2007 the ($38,148), we can see that real GDP per capita the year before the bailout was five times what it was before World War II began.

There’s obviously much more to it than my quickie calculation (just think about how much the U.S. economy and world finance has change since then), but there’s also definitely more to it than what Ritholtz lays out, and it’s not adequate to simply compare inflation-adjusted dollar expenditures. I do fully concur with Ritholtz’s final line, however:

Regardless, no matter you calculate it, we are talking about an ungodly amount of money.

I think our European friends deal with a lot of issues better than we do back here in the ol’ U.S. of A., but our treatment of Free Speech is something I’ve long ranked way above the rest of the world. Hate speech is awful, but as soon as you start passing laws disallowing people from expressing themselves in certain ways, you’ve thrown le bébé out with the bath-water. Free and open democracies run, among a couple of other things, on ideas, and when you allow for the centralized control of the expression of certain ideas, you’ll be putting a small number of people (judges, committees, tribunals, etc.) in charge of deciding what ideas are better than others, instead of leaving that up to the machinery of time and open discourse.

A great illustration of this problem is mentioned by Liptak, where he notes that Brigitte Bardot was recently fined (for the fifth time!) for provoking discrimination and racial hatred when she was speaking out against Muslims for the public sheep slaughtering that takes place during Eid al-Adha. Now, Bardot was probably not very tactful in the way she expressed her protests, but what she was doing was standing up for an extremely deeply held belief she has in support of the rights for animals not to needlessly suffer. This is a belief millions of people around the world support, and I personally know numerous intelligent people who honestly believe animal rights is the next big civil rights movement. You may agree or disagree with this view, but should disagreement with that view be enough to publicly silence it? By continuously punishing Bardot, the French government has officially deemed her cause not properly worthy of public expression.

Do we really want that sort of discretion in government hands? Glenn Greenwald said it very well, in an article criticizing just such laws:

Just like Bush followers who bizarrely think that the limitless presidential powers they’re cheering on will only be wielded by political leaders they like, many hate speech law proponents convince themselves that such laws will only be used to punish speech they dislike. That is never how tyrannical government power works.

Monica Davey, the Times’s Chicago bureau chief, says the ban has been a source of embarrassment for the city and the repeal comes as residents have accused officials of trying to micromanage people’s lives, with talk of prohibiting smoking even outside along the lakefront and eliminating transfats from restaurants.

Similarly, many of the comments to the blog post make the same argument, and are cheering Chicago’s overturning of the ban as a victory against so-called “Nanny-State” regulation of behaviors that pose health problems, such as the ever-growing bans on smoking in public places, or New York City’s recent ban on trans-fats in restaurants (the “food police” is mentioned more than once). Some typical comment excerpts:

“These responses are so great. Why can’t liberal people like me be ok with not having the government control our choices? I mean we are the ones who want the choice to smoke pot but we can’t choose the type of liver we want to eat?” (posted by “Mookie” at 5:29)

“My only hope is that one day I can have my foie gras and veal in peace while sucking away on a cigarette right next to you “progressive” individuals.” (posted by Roland at 5:15)

“time for similar nitwits in NYC (led by “clueless on what my principles are and thus cannot affiliate myself to a party” Bloomie) to learn and not Micro Manage!” (posted by “deydey” at 4:57)

“I’m glad our City Council is finally realizing that it’s not our nanny.” (posted by Chris at 4:38 )

But this is the wrong debate, and is conflating two separate issues. The foie gras ban was not pushed for and passed for the reasons that people support smoking and trans-fat bans, which are regulated for the effect they have on the health of the general population. Supporters of the ban wish to eliminate what some people believe to be a food production process that by its very nature (necessarily requiring force-feeding ducks until they get diseased livers ten times their natural size) is inhumane.

There are plenty of sound libertarian arguments against government trying to stop us from hurting ourselves through our choices, but it’s an entirely different issue when the harm is being imposed on others by our choices, which is what the animal activists believe is wrong in this case. Whether or not one believes the harm caused on these ducks and geese is acceptable for our high-end culinary pleasures is, it seems to me, the debate that should be had.

The first sentence/paragraph of the article is:

Three girls who were imprisoned by their mother in a house of indescribable filth for seven years may never recover from the ordeal, experts said last night.

Hmm, was it really “indescribable” filth? I’ve seen some pretty vile filth described in articles and books before. Isn’t it a writer’s job to describe things like that? Of course, in the third paragraph, the writer goes ahead and describes the filth:

When they were discovered, their home in a smart, upper middle-class suburb had no running water and was filled with waste and excrement a metre high. The floor was corroded by mice urine.

So I guess the filth was quite describable after all, and the author used the word “indescribable” because he wasn’t all that careful in putting together his opening sentence. I’ve seen this done quite a few times, and it really annoys me. When someone makes a living off stringing words together, I’d hope they take the time to use words correctly.

I did a quick Google search (very quick) to see if I could find others also peeved by the misuse of the word “indescribable” and all I found was a comment to a blog post about a new blog that tracks misuse of the word “literally.” Commenter number 9, Satan, is on the ball.

As an aside, it also seems strange to me that the writer used the term “mice urine.” Is that technically correct? Shouldn’t it be “mouse urine”?

As detailed in the New York Times, the ever-entrepreneurial spirit of violent criminals has manifested itself through a recent trend in fake kidnappings in Mexico City. The amazing thing to me about this is that such a scheme can even work. In, say, the U.S., given the extremely low probability of ever being held for ransom, I’m guessing people would want some sort of proof if someone called them and claimed they were holding a loved one.

Not so in Mexico.

Everyone I know from Mexico City (I was raised there and still have family there) has at least one acquaintance who has at one time or other either literally been held captive for money, or has had to physically escape from people trying to capture them. Most people I’ve ever talked to in Mexico City about kidnappings (and, believe me, it’s definitely a topic of conversation) are at two or three degrees of separation from an express-kidnapping-related murder. The odds are still low that on any given day you’ll experience – or anyone you know will experience – a kidnapping, but it’s still completely believable to think a loved one could be kidnapped at any time.

These criminals have managed to tap into a market created by the atmosphere of fear they have themselves fomented over the past decade or so. If people in Mexico weren’t already so afraid of the non-negligible risks of actually being kidnapped, I don’t see how this scheme could ever work.

A big concern with national climate change policy proposals regards the issue of international competitiveness. A national climate change policy like a cap-and-trade system or a carbon tax will impose higher costs on the producers of regulated products, and if foreign producers of competitive goods are not similarly regulated, they will possess a competitive advantage over our domestic producers. Without proper measures, consumers in the U.S. will probably prefer to buy the cheaper (less regulated) imported products over the more expensive (but climate change-regulated) domestic goods. This could not only damage domestic industry (even if producing goods just as efficiently as their foreign competition), but could also lead to more production of unregulated, dirty, carbon-intensive goods (what’s referred to as leakage). A double whammy.

One potentially elegant solution to this problem presents itself in the form of “border adjustments“. With border adjustments, a tariff would be imposed on any product imported into this country from a country that did not impose adequate climate change regulations on its production. A recommendation along those lines has been recommended by two large U.S. Unions (the IBEW and the AFL-CIO), and by the U.S.’s largest coal-burning utility, AEP (strange bedfellows indeed). Their proposal would require “large emitter” countries (read: China & India) to submit allowances to the US for any unregulated emissions created during the productions process of products they intend to export to the US.

A second, much less talked about side to border adjustments regards the exporting of US products regulated under climate change legislation. Using the same competitiveness arguments as with incoming border adjustments, if we want our ostensibly “cleaner” US products to be able to compete with foreign products on their turf, we could offer “rebates” to exporters to strip these products of their regulatory costs when exported to these countries. Without such rebates, we’ll be placing domestically produced exports at a competitive disadvantage with their foreign produced, cheaper, and “dirtier” competition; a situation ripe for leakage.

There are a lot of important issues at stake when thinking about competitiveness and climate change policies. When thinking about these and other issues, it’s been helpful for me to realize that by placing a price on greenhouse gas emissions, a cap-and-trade system or carbon tax will be forcing producers of carbon-intensive goods to cover the true (or at least truer) costs of their products (they will be internalizing an externality). If we agree that unregulated producers in other countries (and currently in this country) are not being forced to pay for these costs, then we can also say they are actually being subsidized by their governments. By imposing border adjustments on such subsidized products, we would just be leveling the playing field.

For more information:

• “Competitiveness Under Climate Policy,” a blog post by Daniel Hall at the environmental economics blog Common Tragedies.
• A paper by Richard Morgenstern at Resources for the Future regarding Competitiveness & Mandatory US Climate Policies.
• “Should a Carbon Tax be Border Adjustable?”, a blog post over at Greg Mankiw’s Blog.

If one were to look for specific examples of “logjams” in U.S. environmental policy, a prime candidate would be the agricultural lobby. This past Sunday the Wall Street Journal, in an article entitled “Farm Lobby Beats Back Assault on Subsidies,” detailed the most recent victory of the agricultural lobby against a proposed (and modest) reining in of the vast system of direct payments and price supports that undergird the multi-billion dollar agricultural subsidy system within the U.S. (make sure and check out their fantastic interactive breakdown of the U.S. agricultural subsidy system).

Thanks in large part to their successful lobbying, agriculture has been practically exempt from environmental regulation, either through explicit exemptions for agricultural activities, or through laws structured in such a way as to allow for farms to escape most or all environmental regulatory impact in what professor J.B. Ruhl (and Breaking the Logjam participant) has deemed the “anti-law of farms.” Professor Ruhl has researched and analyzed agriculture and environmental law in extreme detail, and notes there are “few exceptions to this anti-law.”

It is not a stretch to say that a great many of the harms agriculture is responsible for have been created by or exacerbated by our regulatory coddling of agribusiness. Take just three examples: 1) as noted by fellow BTL blogger Daniel Wieck, agricultural runoff is responsible for the majority of non-point source water pollution in the U.S., yet many “normal farming practices” are specifically exempted from the Clean Water Act; 2) Agricultural price support programs for sugar have artificially raised the price of sugar in the U.S. and have led to the destruction of a large part of the Florida Everglades; and 3) Agricultural activities are also responsible for 7% of domestic greenhouse gas emissions, yet the U.S. is not even considering direct regulation of these emissions.

To top it all off, when Congress actually has legislated curbs on environmental harms from agriculture, they have done so through billions of dollars worth of more subsidy payments – to the very same farms creating the pollution in the first place! (There are two primary types of federal programs that provide subsidies to the agricultural industry ostensibly for environmental protection: land retirement, easement and conservation programs such as the Conservation Reserve Program (CRP), and working lands programs such as the Environmental Qualities Incentives Program (EQIP) (the NYT had a great recent article on EQIP)).

This is a serious logjam in environmental regulation, and many people on both the left and the right agree something needs to be done to lessen agribusiness’s hold on legislation. New Zealand managed to do so in 1984, despite having an economy much more reliant on agricultural production. It’s time we follow suit.

Further Reading:

• Agribusiness: Long Term Contribution Trend (agribusiness lobbying data from the Center for Responsive Politics)
• “Surviving Without Subsidies” (Aug, 2007 NYT article by Wayne Arnold)
• “In the Farm Bill, A Creature from the Black Lagoon?” (January 2008 NYT article by Andrew Martin)
• “EQIP in the News” (post by Anthony Schulz in Agricultural Law Blog)

Not to belabor the blog discussion brought up in Lars’s earlier post regarding public transportation (good post, Lars!), but as I was listening to today’s panel discussion, and the point about whether or not public transport was a viable solution for a large part of the U.S., I was reminded of an article I read earlier last year in the New York Times which seems to offer a possible solution to some of the cultural, geographical and logistical difficulties with replacing our car-driven culture with more and better mass transport systems.

Google has managed to build up and run one of the major mass transit systems in the Bay Area to shuttle their employees to and from work. It appears to be wildly successful. Could not other iterations of similar systems be put together by other large-scale employers (or groups of smaller employers) to help lessen the congestion (and its accompanying pollution) problem due to the US’s uniquely sprawled geography? (according to the article Yahoo and Ebay have already started imitating their transport system). If we view congestion and pollution as an externality brought about by large employers locating in areas where most of their employees have to commute long distances every day, would it be insane to expect these employers to foot the bill for alternative transportation systems?

Also, as an aside, since Google explicitly sells their transportation system as a fringe benefit to attract employees, the idea that Americans are unwilling to change their car-driving desires seems to weaken a bit. I for one would rather rely on an efficient and comfortable transport system than have to put up with suburban commuting (but maybe that’s just me).

Panel IV has been discussing the role of ecosystem services in our approach to land and farm policy. Panelist Baron Thompson discussed the wide-randing opportunities and challenges from reframing environmental issues in terms of ecosystem services, and JB Ruhl, while not present at the panel discussion (due to a canceled flight) is presenting a symposium paper on agricultural ecosystem services.

Discussion of ecosystems services brings to the fore the important issue of what role we can expect from the agricultural industry in domestic climate change policy. In the US, agriculture is responsible for approximately 7% of GHG emissions, mostly in the form of methane and nitrous oxide emissions. However, agriculture also has the potential to biologically sequester carbon (and thus reduce atmospheric carbon dioxide) through the adoption of certain farming practices such as reduced tilling. Biological greenhouse gas sequestration is a perfect example of an ecosystem service, and, as professor Thompson pointed out, it is currently one of the only ecosystem services that actually has any money behind it.

Despite agriculture’s non-trivial contribution to GHG emissions, it is highly unlikely to expect U.S. legislation to directly limit agricultural emissions. So far, only New Zealand has planned to include agriculture “within” its cap-and-trade system (which probably has something to do with New Zealand being the only OECD country without a vast system of agricultural subsidies). We will likely see, however, assisted voluntary participation in U.S. climate change policy through the sale of “offset credits” to entities directly capped in their emissions (for example, the current version of the Lieberman-Warner bill — the only bill to have already been passed by the Senate Environment & Public Works Committee — will allow for up to 15% of capped entity emissions reductions to be achieved through the purchase of agricultural offsets). Typically, such an offset system within a larger cap-and-trade program allows for the capped industries to purchase a certain amount of offset credits from individual farms that have adopted practices or technologies that will decrease direct GHG emissions or increase the amount of GHG sequestered.

In such a system, while the agricultural industry will not be forced to reduce their GHG emissions or increase their carbon sequestration, they will be incentivized to do so. If the price that the buyers are willing to pay for the offset credits are more than the cost to farmers for adopting the new practices or technologies required to reduce emissions or increase sequestration, then farmers will adopt these new practices and technologies voluntarily in order to reap the financial benefits from selling offset units. It remains to be seen if such a program will be a useful contributor to domestic greenhouse gas emissions reductions.

I was asked to help out at the symposium by live-blogging some of the panels, and have been invited to continue to blog periodically at the Logjam blog (which I still think should be called the Blogjam). I will include any logjam posts I write on this blog.