While reading it I came across an interesting statistic, which appears very timely seeing the politicians are interested in factors like prediction and control at present.

Japan has the highest rate of cigarette consumption in the Western world (big countries). In fact the place just billows so much cigarette smoke that one day the IPCC may well suggest an ETS of Japanese smoking obsession. ☺

Japan has also close to the highest if not the highest big western country longevity rates in the world too.

Statisticians find it awfully hard to find an answer to this glaring anomaly. Of course the possible answer could be diet related. However if that’s the case then smoking may not necessarily be the leading cause of death in the West that we’re often told it is. I’m just throwing this up, as I don’t really know and it is in no way a suggestion that anyone should take up the habit. This is particularly so since big stats doesn’t necessarily lead to individual fortune

Japan’s longevity and very high per capita smoking offers an interesting insight that lots of things are really non-linear. This is possibly food for thought as a large number of politicians try to peddle a huge government redistribution money grab under the pretext of saving the planet.

Things are usually not so simple.

Most of the time, most cars impose minimal costs on other road users. However, when vehicles drive on a congested road they impose costs on other drivers. Each driver thinks of their own need to get to their destination, not considering how, by taking up space on the road, they impinge on the ability of other drivers to do so.

We’ve seen this argument before, from Harry Clarke, which is where Ken Henry may have got it, perhaps.

He’s wrong. Both John Humpheys and I demonstrated the logic/arithmetic error in this argument in a thread some time ago and Harry never came back to defend it. It appears to be wrong because they/he doesn’t appear to be counting correctly, which seems a pretty surprising error for a Treasury Secretory head to be making although i forgive Harry of course as I’m eternally gracious that way.

Here’s Harry saying pretty much the same thing in the thread by giving an example like Henry’s.

John suppose I enter a crowded road and work out that the time and petrol cost of getting to my destination is $15 (that’s the personal marginal cost of me entering traffic) but that by doing this I get a benefit of $25 so off I go.

I head off to this particular destination (’The Honey Motel’) along with 1000 other motorists who go to about the same place. I increase their travel times by 1 second per car so I cost them 1000 seconds or by about 17 minutes. If the value of their time is $50/hour I have increased their travel costs by about $14-20. That’s the larger social marginal cost of me entering traffic. It’s bigger than my personal marginal cost.

The $14-20 is the charge that should be levied on me if there was efficient tolling. So now my total travel costs would go to $29-20 (my new personal marginal cost of making the journey) so I forego the trip.

Its sad. In this deal I lose consumer surplus of $10 as a consequence of the charging since I now don’t go. But society saves $14-20 providing a $4-20 social gain. That is the basis for congestion pricing.

Without it I would have got my $10 surplus but other motorists would have lost $14-20.

Meanwhile back at ‘The Honey Motel’ my irrepressively sensuous adoring fan growls with annoyance into her mobile phone that ‘this is absolutely the last straw’. But I don’t believe her. I know that I project a well-worn, animal magnetism and that she will still come to offer me new invitations even though I valued an afternoon with her at a mere $25.

Here’s John response

The 1000 motorists lost 1 second each because of you.

And you lost 1 second because of each of the 1000 motorists.

So the cost to you of the congestion was 1000 seconds (or $14 assuming $50/hr). And the cost by your contribution to the congestion was 1000 seconds (also $14).

The problem with your example is that you shouldn’t have started with a cost to you which included the congestion cost. Start with your personal non-congestion costs… then add in the congestion cost to find the optimal decision. To work it out for society you should add $14 to the cost. To work it out for yourself you should also add $14 to the cost. So the incentives are already correct.

Here is mine.

Let’s take your example of one driver costing all the other drivers combined 1,000 seconds (1 second each). That ‘s fair enough, however you simply can’t account the cost of one driver to the rest without accruing I second from each of the other drivers to single driver.

So here’s your math equation (999 seconds-1000 seconds)+ 1 second =0. (Modified it)In other words each person costs the other drivers equally.

Road pricing shouldn’t be about getting bloody cars off the road. The priority is about pricing roads to usage and reflecting true replacement costs. it may very well happen that people do get off the road and the marginal user begins to take public transport. However as far as public policy is concerned there are also other issues involved like quality of life etc. Personal preferences made and dressed up to appear like an economics argument shouldn’t see the light of day.. Henry really shocks me.

If the government was really serious about lowering emissions because high carbon emissions are dangerous to the planet’s future then why are they also promoting or rather maintaining a high level of immigration from poor countries that are obviously low carbon intensive? I’m not for a moment suggesting we should close down immigration as I normally range from open borders (if matched by low welfare) type to low restrictions but choosey from which countries we select from.

Pushing this barrow a step further, if warmers were also sincere about following their intellectual argument to it’s natural progression shouldn’t we also be following a zero aid policy to the poor countries and pulling out, or rather closing down/withdrawing financial support aid agencies like the World Bank and preventing the IMF from lending money to the poor (and obviously low emissions countries)?

The point I’m making is that if AGW is the “moral dilemma of this generation” and our success at cutting emissions is imperative to ensure the survival of the planet and the species etc. then there should also be a quick and total retreat in such areas of aid and lending to the poor countries as well as total moratorium on immigration from the poor countries as new immigrants would invariably raise their carbon foot print to our present average levels.

Now , I don’t advocate these policies of course , although aid is problematic from another perspective, however I would think that intellectual consistency from the doomsayers would eventually have to lead them to these sorts of policies.

I read a paper linked  by ClimateAudit.com which describes a finding by a statistician, David Stockwell about a widely circulated paper suggesting AGW was getting worse. Stockwell strongly asserts that the paper applied “wrong” statistical smoothing in a non linear data series.

What’s the problem with that?

Well, Garnaut used that paper called Rahmstorf  et al (2007) to basically anchor  his entire economic analysis. So it could very well be that Garnaut’s advice to the government was actually premised on wrong statistical evidence that AGW was getting worse than originally thought, particularly as it compares to what the IPCC said.

Abstract from the Stockwell paper says:

The non-linear trend in Rahmstorf et al. [2007] is updated with recent global temperature data.  The evidence does not support the basis for their claim that the sensitivity of the climate system has been underestimated.

And here is what Stockwell says about Garnaut.

Despite the lapse in statistical rigor, Rahmstorf et al. [2007] has been widely cited in support of more urgent action on emission controls [e.g. Garnaut 2008].

So from what I can gather Garnaut moved away from the science applied in the IPCC report to a much more gloomier report and based his economic study on a paper, which has now been possibly found to be of dubious quality and reliability. Further, if is found to be dubious is there a legitimate claim for a refund?

See here for the paper. Sourced from ClimateAudit.

Here’s my question: are we going to see Garnaut and the Government come back and revise their strategy and economic analysis if the paper is found to be a unreliable?

Who is David Stockwell?

After receiving his Ph.D. degree in Ecosystem Dynamics from the Australian National University in 1992, Dr Stockwell worked as a consultant until moving to the San Diego Supercomputer Center at University of California San Diego in 1997.

[Formatting edited 06/07/09]

It is a slow day in the East Texas town of Madisonville. It is raining, and the little town looks totally deserted. Times are tough, everybody is in debt and everybody lives on credit. On this particular day a rich tourist from the East is driving through town. He enters the only hotel in the sleepy town and lays a hundred dollar bill on the desk stating he wants to inspect the rooms upstairs in order to pick one to spend the night. As soon as the man walks up the stairs, the hotel proprietor takes the hundred-dollar bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to pay his debt to the pig farmer. The pig farmer then takes the $100 and heads off to pay his debt to the supplier of feed and fuel.

The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has lately had to offer her “services” on credit.The hooker runs to the hotel and pays off her debt with the $100 to the hotel proprietor, paying for the rooms that she had rented when she brought clients to that establishment.

The hotel proprietor then lays the $100 bill back on the counter so the rich traveler will not suspect anything.

At that moment the traveler from the East walks back down the stairs, after inspecting the rooms. He picks up the $100 bill and states that the rooms are not satisfactory…… Pockets the money and walks out the door and leaves town.

No one earned anything. However the whole town is now out of debt, and looks to the future with a lot of optimism.

That, ladies and gentlemen, is how the United States Government is conducting business today. If that doesn’t scare the hell out of you, then I don’t know what will.

I didn’t think this until recently when I was speaking to friend involved in mining. He explained that the ETS will have the effect of taxing exports and despite industry groups pointing this out at numerous meetings the government feels it can’t back down from the election commitment it made otherwise it would incur scorn from the Green groups.

Incredibly this push towards fewer emissions through the ETS could end up encouraging marginal mining to become competitive elsewhere in the world perversely having ZERO effect on global emissions.

Meanwhile the Congressional reps have passed a bill containing provisions to tax imports declared to be carbon intensive from countries deemed lax in taxing carbon emissions under the various provisions of the act.  Everyone’s antennae should be raised as this could be a cover for protectionism under the guise of eco-taxes and we end up with the big players beginning to tax each others exports and we end up in Dante’s  Inferno. The Congressional Reps are not exactly known as big free trade supporters even in boom times.

The recent US/China discussions in preparation for the Copenhagen round went as well as you’d expect. It didn’t. They were so wide apart it isn’t funny and unless this was just political posturing on their part the chances of reaching some sort of workable agreement in December is zero.

I guess our resolve to set an example to the rest of the world doesn’t appear to have been a resounding success at this meeting. I tried and tried but I couldn’t imagine either of the two sides at the bi-lateral meeting saying “ look we have to reach an agreement because Australia is putting forward an ETS”. Somehow I couldn’t see it happening☺ Next time someone says we need to do the ETS  in order to set an example we should ask them how Europe’s “ example” has been fairing in turning heads as they have been busily appearing to set movable targets for about a decade now. How’s that “ example been working out?

Cap and trade could really end up being Smoot Hawley in drag?

I’m take Rudd at his word that in fact they will try to sell the network after a period of time so I’m assuming it’s supposed to be a commercially and economically based proposal.

Rudd has said the total cost of the project will be $43 billion of which I believe after reading a few contradictory pieces, the original promise of $4.8 billion that was supposed to be used  to sweeten the winning bid will be the equity portion of this new deal used to anchor the project.

I have avoided discount cash flow projections because I can’t be bothered as today’s Dollar will suffice.

Total cost of the project is $43 billion
Total borrowing cost on $38.3 assuming a 6% interest
coupon on the bonds issued                                                                                      2.3 billion

Estimated operation costs                                                                                         1.5 billion

Depreciation: 20% per year based on the standard depreciation
allowance for high tech equipment. I have also assumed that
$15 billion of the costs represents cap ex.                                                                    3  billion

Estimated minimum return based on the sales to net profit
margin lifted from Telstra’s projected earnings in 2010 which
are around 20%                                                                                                      1.7 billion

Sales needed to meet these objectives                                                                 $8.5 billion

The planned project has to make $8.5 billion in sales to reach some sort of commercial viability. I honestly can’t see how this project could even be considered viable. In fact the only way it can is that they will allow the project to cannibalize sales in the private sector obviously ably assisted through legislative fiat.

Telstra has said it could provide an identical service at 100 Mbps to 2.7 million customers simply by reworking the current Foxtel cable  at a third of the price. I bet that will be legislated out as a possibility or hamstrung through regulation.

Judging from these numbers the country will end up with a huge albatross that is way over-extended in terms of our needs and can only be supported through laws that restrict current entrants from competing.

This is going to be a wholesale provider so the expenditure (without even taking into account the retailers margin) will be around $425 per man woman and child at the wholesale level.

Another useful project that will only lower our living standards

Down the list of participants he refers to John Humphreys and the ALS saying:

Australian Libertarian Society. Basically this is John Humphreys, whose response to any disagreement is to accuse you of lying. True to form, when I commented on his post, Humphreys accused me of lying, though this time he also deleted most of my comments as well.

Err, as I recall John deleted Lambert’s comments because he was unnecessarily abusive to him.

John doesn’t accuse people of lying in disagreements, unless they’re being flagrantly intellectually dishonest like Lambert. Lambert is of course the person who was peddling that Lancet Survey which suggested 7.8 trillion Iraqis had died as a result of the war and the death rate was compounding at a 30% factor per hour.

John always eloquently explains his position in a polite way. I vividly recall the thread in question. Lambert was being intellectually dishonest as usual, finally resorting to bringing up old arguments going back to 2004 that were totally irrelevant to the subject matter and rightly removed from the thread. In fact it became so bad that Lambert had to be moderated off the ALS site: an honor, which he shares with Bird making the term,“ Lambird” quite fitting indeed.

Here’s what John H actually said on the thread.

I don’t think your answers to the 6 questions are entirely accurate.

1. The earth did warm during the last few decades of the 20th century, but it has stalled lately. It is quite likely that it will go back to warming soon… but there is a small chance that it won’t and we should retain some hope.

2. The impact of global warming depends very much on how much warming there is. Some areas will benefit and some will lose, and there is no clear net cost until the warming exceeds 2 or 3 degrees. So far we’ve only seen 0.6 degree warming. Remember that humans are always adjusting for a number of reasons, so slow adjustment to a changing environment is not a new trick for humans.

3 & 4. It seems likely that co2 (& other greenhouse gases) released by humans are contributing. But it is uncertain how much they are contributing. The IPCC says that they are the primary cause, and they may be correct.

5 & 6 depend very much on the details of the policy solution. While I have no doubt that it’s possible to create a climate policy that passes a benefit-cost analysis (I believe my suggested carbon tax does), I do have quite a bit of doubt that the chosen policy will be as good.

The theoretical possibility of the government doing the right thing is not generally matched by actual government action.

This sounds like a perfectly reasonable view, however Lambert suggests he’s lying.

Lambert seems to posses that fine gift of poisoning almost every discussion whenever he jumps onto a thread, which is one of the reasons the Online Opinion editor referred to him as a bully and a tick.

update

Lambert responds with more lies and distortions in the comments section of his silly thread:

John, you claim that you deleted my comments because they were off-topic. But you did not delete a host of off-topic comments abusing me and my blog. Care to tell us the real reason?

John did actually delete quite a few of my comments.

In a post on your blog Joe Cambria claims that my deleted comments were “abusive”. You know this to be false. Why haven’t you corrected him?

Lambert assumes to know who I am. He also suggests his comments aren’t abusive. But they were insulting and irrelevant to the conversation. They could be best described as poisonous.

I don’t have a copy of your comments, but I think folks can work out what you were saying from my replies, but feel free to explain yourself — I won’t censor you.

Of course he does. Lambert keeps everything that he can use to distort future debates. I’d bet the first toilet paper roll he used is safely tucked away somewhere.

Your claim that “the current temperature is nearly exactly the same as the average over the 1970s.” wasn’t remotely close to being true when you wrote it. Study the graph, which shows what the situation was when you wrote your post.

More dishonesty. John has said that he was using contemporaneous data. Lambert ignores this.

A lady died this past January, and Citibank billed her for February and March for their annual service charges on her credit card, and added late fees and interest on the monthly charge. The balance had been $0.00 when she died, but now somewhere around $60.00. A family member placed a call to Citibank. Here is the exchange :

Family Member: ‘I am calling to tell you she died back in January.’

Citibank: ‘The account was never closed and the late fees and charges still apply.’

Family Member: ‘Maybe, you should turn it over to collections.’

Citibank: ‘Since it is two months past due, it already has been.’

Family Member: ‘So, what will they do when they find out she is dead?’

Citibank: ‘Either report her account to frauds division or report her to the credit bureau, maybe both!’

Family Member: ‘Do you think God will be mad at her?’

Citibank: ‘Excuse me?’

Family Member: ‘Did you just get what I was telling you – the part about her being dead?’

Citibank: ‘Sir, you’ll have to speak to my supervisor.’

Supervisor gets on the phone:

Family Member: ‘I’m calling to tell you, she died back in January with a $0 balance.’

Citibank: ‘The account was never closed and late fees and charges still apply.’

Family Member: ‘You mean you want to collect from her estate?’

Citibank: (Stammer) ‘Are you her lawyer?’

Family Member: ‘No, I’m her great nephew.’ (Lawyer info was given)

Citibank: ‘Could you fax us a certificate of death?’

Family Member: ‘Sure.’ (Fax number was given )

After they get the fax :

Citibank: ‘Our system just isn’t setup for death. I don’t know what more I can do to help.’

Family Member: ‘Well, if you figure it out, great! If not, you could just keep billing her. She won’t care.’

Citibank: ‘Well, the late fees and charges will still apply.’

(What is wrong with these people?!?)

Family Member: ‘Would you like her new billing address?’

Citibank: ‘That might help…’

Family Member: ‘ Odessa Memorial Cemetery , Highway 129, Plot Number 69.’

Citibank: ‘Sir, that’s a cemetery!’

Family Member: ‘And what do you do with dead people on your planet???’