Muck and Mystery
   Loitering With Intent
blog - at - crumbtrail.org
May 17, 2009
As Usual

Our current malaise and Obama's blundering responses have resulted in a great deal of hand wringing and claims of deception by some of those who so foolishly supported the Democrats though it was clearly not in their interests to do so. Accusations of incompetence, corruption, broken promises, outright lies and political shenanigans abound.

The unmasking of Democrat happy talk happened sooner and more severely than anticipated, but should not otherwise cause any surprise. Their behavior is consistent with their stated views and previous actions. They are who they are and don't apologize for it. It's a brazen organized crime syndicate that plays the public for suckers. It always has been, it always will be.

Republicans are not measurably better, but they are different. The fact that they are courting a constituency that is largely more conservative, traditional and less libertine means that they must be slightly more circumspect about their looting. Don't do it in the street and scare the horses.

This all bubbled back into thought with current readings about climate hustles - one of the feed troughs beloved by Democrats as a cornucopian source of slops. In this the Democrats have many international allies who have been gorging themselves with such fare for some time. There is resistance, though it is meager thus far.

An unfounded sense of crisis dominates public discussion of environmental issues, and shrill demands for urgent action to mitigate climate change thrive at the expense of genuine, illuminating, nuanced debate about how to make the best of an uncertain future. We believe that is well worth resisting. . .

Climate Resistance is edited by Ben Pile and Stuart Blackman, writers, in York and Edinburgh respectively, with a particular interest in the relationship between science and politics.

I'm less certain about things than these folks, but they talk about issues that trouble me and that are being gamed by politicians in despicable ways. The political crimes are clear, but the threats that are exploited are possibly important. A recent post of theirs is a good place to begin.
George Monbiot isn’t always entirely wrong. . .
Why is the Medical Research Council run by an arms manufacturer? Why is the Natural Environment Research Council run by the head of a construction company? Why is the chairman of a real estate firm in charge of higher education funding for England?

Because our universities are being turned into corporate research departments. No longer may they pursue knowledge for its own sake: the highest ambition to which they must aspire is finding better ways to make money.

The increasingly cosy relationship between government, industry and the Academy (we’d throw activism in there, too) is certainly a problem. But that’s not to say Monbiot is entirely right.

First, his article is notable for what it leaves out. He could have added: Why is the Economic and Social Science Research Council’s Centre for Climate Change Economics and Policy (CCCEP) chaired by the vice-president of a firm offering carbon-finance products? Or why is the Committee on Climate Change (CCC) chaired by a businessman and green activist?

One doesn't need to look very closely to observe that government is a spoils system that rewards supporters with prestige, power, money and the usual perquisites of intimate tyrannies. It has very little to do with good governance or public virtue. It has always been so and anyone above 13 years of age ought to be quite clear about this.

The blundering of the new adminisrtaion in the US does not prevent it from pursuing its real business - looting - with vigor and alacrity. A prominent current effort is new climate legislation.

. . . not long ago, many of today’s supporters dismissed the idea of tradable emissions permits as an industry-inspired Republican scheme to avoid the real costs of cutting air pollution. The right answer, they said, was strict government regulation, state-of-the-art technology and a federal tax on every ton of harmful emissions.

How did cap and trade, hatched as an academic theory in obscure economic journals half a century ago, become the policy of choice in the debate over how to slow the heating of the planet? And how did it come to eclipse the idea of simply slapping a tax on energy consumption that befouls the public square or leaves the nation hostage to foreign oil producers?

The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics. . .

Cap and trade, by contrast, is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan. . .

Representative Henry A. Waxman, a California Democrat and chairman of the energy committee, and his allies are marshaling many of the same arguments for the cap-and-trade approach as they used two decades ago for acid rain. A cap-and-trade program brings support from industries that prefer it to a top-down federal regulatory scheme, they say.

But despite its success in the relatively contained problem of acid rain in the United States, cap and trade has proved less useful in other environmental problems and has gotten off to a troubled start in Europe. . .

Cap and trade evolved from an academic debate that began in the early 1960s when Ronald H. Coase, then a professor at the University of Chicago Law School, wrote an influential paper, "The Problem of Social Cost,” that examined when government should intervene in cases where a private entity causes public harm.

In 1971, W. David Montgomery, a Harvard graduate student in economics, fleshed out the idea of emissions trading in his doctoral thesis and has spent much of the last three decades trying to figure out how the marketplace can deal with environmental problems that are caused by relatively few actors but have consequences felt globally.

He supported the acid rain trading program, but said it was based on “unique historical and economic circumstances” that did not apply to the much more difficult problem of carbon dioxide emissions.

Mr. Montgomery, now a vice president at Charles River Associates International, a consulting firm, said Mr. Waxman’s proposal would ultimately act like a tax on carbon-producing industries, disguised by a complex cap-and-trade system.

“It is a steel fist of regulation covered by a velvet glove of emission trading,” Mr. Montgomery said. “Why not just impose a carbon tax?”

Well, no. It won't "act like a tax on carbon-producing industries", far from it. It's more like a subsidy than a tax. The key to understanding the Byzantine mess comes from understanding All About Offsets.
The Waxman Markey Bill is a massively complex, sprawling, and confusing piece of legislation (here in PDF). Reading through it I observed the large role of offsets in the legislation and decided to quantify that role. . .

The bottom line is that under WM, it seems quite possible that business as usual carbon dioxide emissions can continue simply through reliance on about one half of the available offsets. To the extent that these can be conjured up, they will work to depress the price of the allowances issued under the program, keeping down the carbon price. More generally, WM sets up a massive accounting game that should be appealing to carbon traders and those providing offsetting services, as well as many others involved in the carbon industry. It is no wonder that many enviornmental groups are opposed to WM.

Writing last week on the similarities between scandal engulfing the UK Parliament and the failure of bank regulation, John Kay describes a general lesson that might equally be applied here:

The Australian economist, Joshua Gans, recently described a problem central to the current financial turmoil. How could he persuade his young son not to wet his pants?

Believing in the power of incentives, Mr Gans offered a reward if his son could keep his pants dry for seven nights. The boy simply removed his pants. The prohibition was on wetting pants, not on wetting the bed. Young Gans was learning a skill that would equip him well to be a British MP, or a senior executive in a global bank. . .

The Gans household elaborated the rules to close the loophole, only to discover that their child was able to construct yet more ingenious methods of circumvention. . .

Regulation by rules invites compliance with the rules rather than the objective of the rules, and the more extensive the rules the easier it is to lose sight of the objective. . .

Simpler rules may be less harmful than complex rules, but they can only work when the simplifications correctly exemplify underlying values.

It is bizarre, even farcical, that the U.S. Congress says that it is committed to reducing greenhouse gas emissions, but at the same time it is spending a huge effort and political capital creating a Byzantine system of rules that will allow, even encourage, exactly the opposite to happen.
This is elementary management knowledge taught in every "charm school" as well as in formal education. It is also folksy farmer wisdom: you get what you manage for whether you understand what that will be or not. If it happens to you, it's your fault, a result of your decisions. The world does not respond to your hazy objectives, it responds to constraints while all agents continue to pursue their various objectives. It's cat herding to seek to direct them. Any pressure causes the agents to scatter: every cat for itself.

Said another way, there is no DWIM (Do What I Mean) command, the semi-humorous mythical grail of software interface designers that can somehow interpret the bumbling efforts of end users and perform the tasks that they would have commanded had they actually understood what they wanted with sufficient clarity to give good directions to the obedient but painfully literal computer. This is also how wizened enlisted soldiers destroy moist young officers. They just do as commanded and so make the foolishness of the commands obvious.

In other words, Waxman and Markey, all of the captains of industry and finance, and all of the bureaucrats, accounts and lawyers know how this will play out. They understand the theory and they have the European example. It's not about reducing greenhouse gas emissions. No one is so foolish as to believe that this is possible to do by government fiat. It's just a gravy train, a way to bilk the public and entrench the powerful. It's the new derivatives market, a boom industry, and will surely end in tears when the bubble once again bursts.

It is also worth noting that it wouldn't work even if it worked. The world would not be improved even if "a steel fist of regulation covered by a velvet glove of emission trading" functioned as a carbon (i.e energy) tax. Energy is only one part of the system of systems. Raising costs there will have effects analogous to those of Mr Gans' bed wetting son. The more tightly you squeeze the more ingenious the evasions since reality has not been repealed. Making energy expensive is not in the interest of humanity. No sane or civil person would ever suggest doing so. The villains that seek to do so - and profit on the turmoil - really are criminals committing crimes against humanity. We know this. They know this. Their excuse is that humanity is committing crimes against nature and so deserves to suffer, deserves punishment.

It is left as an exercise to enumerate and reflect on all of the other times that this sort of sick logic has been used in our blood soaked history.


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