Information Landmine

"The Americans keep telling us how successful their system is. Then they remind us not to stray too far from our hotel at night." - An un-named EU trade representative quoted during international trade talks in Denver, Colorado, 1997.

Wednesday, June 04, 2008

Back-asswards politics

In addition to the other silver-linings I've pointed out about rising oil prices, there's the fun to be had watching US pundits play the political equivalent of musical chairs - getting up, running round and sitting in a new position when the music stops. This is not exactly new (I'm not old enough to remember a time when fiscal conservatism was a conservative idea, but apparently, some time before Reagan...), but t is funny. For example, check out Robert J. Samuelson railing against the, one would think quite economically conservative, idea of trying to factor the cost of carbon emissions into energy production:

If we suppress emissions, we also suppress today's energy sources, and because the economy needs energy, we suppress the economy. The models magically assume smooth transitions. If coal is reduced, then conservation or non-fossil-fuel sources will take its place. But in the real world, if coal-fired power plants are canceled (as many were last year), wind or nuclear won't automatically substitute. If the supply of electricity doesn't keep pace with demand, brownouts or blackouts will result. The models don't predict real-world consequences. Of course, they didn't forecast $135-a-barrel oil.

So you're saying that there may be some problems with highly abstract models of the economy that just assume that demand will always generate supply and vice-versa? What happened to Say's Law, Arthur Laffer, and the general idea that economies are robust, complex things that, if left unfettered, will incorporate all available information and arrive at the best possible solution in the best of all possible worlds, Rob?

Meanwhile, on the other side of the political fence, Mark Morford gets religion on just that concept as he ponders the consequences of all this new information being incorporated into the pricing system:

Alternative energy sources? All the rage. From hemp to algae to ass fat to pig manure to dead cats, the question will soon be, what won't we consider as a new source to power up the Can-Am Spyder to get us to the dance on time? Ingenuity will flourish. Ingenuity will confound. Ingenuity will annoy the hell out of millions of die-hard car lovers who just want to drive the Audi to Whole Foods without having to sell a kidney. Oh well.


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