Archive for the ‘economics’ Category
Credit card disclosure rules
The new credit card disclosure rules went into effect this month with a few interesting changes to our statements. It’s a little shocking when you see the cost of carrying a balance spelled out in plain text:
It will take me 17 years to pay off my balance if I make only the minimum payment. 17 years!
Increasing the payment by a modest $20/month (by, say, skipping a fancy coffee one a week) would bring that payoff period down to 3 years and save me almost $1400 in interest charges.
Behold, the power of compound interest.
(Don’t worry, I pay off my full balance every month. They probably hate me as a customer.)
Filed under economics : Comments (2) : Feb 28th, 2010
This one’s a little dark. You’ve been warned.
I’m amazed at how little attention is paid to climate change in the U.S. Sure, we talked about the Copenhagen summit for a news cycle, and we loved chirping about the dastardly U.K. scientists and their suspicious emails. But given the potential costs of climate change, it’s alarming how little attention it gets. Future historians will be utterly bewildered as they sift through the clues we leave behind and wonder how we so willingly brought collapse upon ourselves. We have completely failed at weighing the relative costs and benefits and have likely sealed our own fate.
Climate change critics generally start by [drastically] overstating the level of disagreement within the scientific community regarding the anthropogenic causes of climate change. I won’t waste much text here, but to be clear, there is no disagreement. Climate change is happening and humans are causing a large part of it; the only debate remaining is whether our share of the blame is 95% or 96%.
Once the seed of doubt is placed, the critics then scare us with dire predictions of a possible future. Dealing with climate change would require significant changes to the way we live, it would require significant investment in new infrastructure and technologies, and would alter the institutions we’ve been familiar with for the past century. Therefore, the theory goes, we should do nothing.
For the sake of argument, let’s assume there is a legitimate debate within the scientific community (remember, there’s not). I’ll even be so generous as to assume a 50/50 split. If that were the case, how should we respond?
The costs of unmitigated climate change are immense. The path we are on leads to massive population displacement, food shortages caused by flooding and draughts, accelerated species extinction, and (eventually) economic and civilization collapse. Yes, collapse.
What about the costs of attempting to stem the tide of climate change? These, too, would be large. The standard of living for developed nations would be altered forever. Air travel would no longer be available to the public. Nor would personal automobiles. Meat would be a luxury instead of a staple. Our cities and towns would contract and the massive suburban developments would transition back to agricultural land. The number of farmers would increase 10-fold (at least). Many industries would cease to exist and those that remained would look completely different. Our national wealth would have to go into buying things like wind turbines and solar panels instead of HDTVs and fancy cars. Make no mistake, life would be very very different. But we would have a real fighting chance at staving off the total collapse of our civilization.
When presented in these terms, is there really any question of which path to take? I’m so tired of hearing about the “energy tax” and the costs of transitioning to a carbon neutral energy mix. Money won’t buy you much if the global economy fractures under the strain of climate change.
[ . . . ]
Easter Island (the place with the giant stone heads) was once covered in thick forrest. Poor resource management and fanatical obsession with erecting the giant stone heads lead to 100% deforestation of the island. At some point, some one cut down the very last tree left standing. What do you suppose that felt like?
Soon, we all will know.
Filed under climate change, culture, economics, energy, politics : Comments (0) : Feb 27th, 2010
What if the Bush tax cuts had never happened?
The Wall Street Journal published some great graphs and charts detailing the Federal budget over time.
Looking at the Cash Flow graph in particular, I noticed a striking decline in Revenue from 2000 to 2004 (i.e. G.W. Bush’s first term). When Bill Clinton left office, we had a healthy budget surplus. A trillion dollars later, we were back in the red.
I wanted to try something, so I adjusted the graph to erase the Bush tax cuts (shifting the revenue line up, represented in green below). Imagine my shock and surprise when I discovered that this adjusted revenue line coincided with spending estimates in 2015.
Now, I realize there are about a hundred holes in my logic here. I can’t move lines around on a graph and pretend that it represents an alternative history. Moreover, it’s a useless argument since we are where we are and we can’t go back in time. Even so, I think it’s important for us to realize the future costs of policy choices.
Filed under economics, politics : Comments (0) : Feb 2nd, 2010
Way better than State of the Union
Filed under economics, politics : Comments (0) : Feb 2nd, 2010
Minnesota takes aim at North Dakota
Minnesota (my beloved home state) has just fired a shot across their western border towards North Dakota. From Scientific American:
To encourage the switch to clean renewable energy Minnesota plans to add a carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, to begin in 2012, to discourage the use of coal power; the greatest source of greenhouse gas emissions.
To provide some context, North Dakota is a state with dwindling population and abundant cheap coal. There are a number of coal-fired power plants that export electricity across their borders to the more populated (and less coal-rich) Minnesota.
Continuing the article,
State officials in North Dakota are mounting a legal battle against Minnesota. State officials argue that this would unfairly discourage coal-powered electricity sales in favor of renewably powered electricity.
Really, North Dakota. No shit.
Fortunately for their state, North Dakota is also blessed with an abundance of wind resources. The same high voltage lines that carry dirty coal electricity could be used to export wind power instead.
There’s two ways they can play this:
1) Use the tariff as a direct financial incentive to agressively build wind farms and increase local employment
Or
2) Spend millions of tax dollars fighting the tariff in court and continue down the dead-end of coal power plants.
I wonder which path North Dakota will take?
Filed under climate change, economics, energy, environment, politics : Comments (1) : Jan 6th, 2010
