Bad news that shouldn’t surprise us

The European Union is flaking on climate change, because doing anything about it will hurt GDP in the short run.  This is particularly nuts for them, because Europe is a lot further north than most people realize: the latitude of New York is also the latitude of Madrid and Rome; London is up there with lower Hudson’s Bay.  Of course, global warming might just put the Scots and Swedes in the wine or even banana business big time.  But it also might mess up the Gulf Stream that gives Paris a milder climate than New York rather than the climate of Fargo.

daumierSnow,real snow…I hadn’t seen any in Paris since 1822…it makes me feel thirty years younger!

Not only will a lot of Europe around the edges be going under water, but a lot more will be Arctifying while the rest of the world broils. This pullback is not surprising, unfortunately.  The hard truth about climate stabilization follows from the non-negotiable fact that the atmosphere is well-mixed, so a pound of CO2 released anywhere has about the same warming effect everywhere: the climate benefits of greenhouse gas (GHG) reduction are diluted all over the world.  About a ninth of the people in the world live in Europe, so the European benefits of $1m worth of climate stabilization are only about $110,000: to be worth it for them, climate policy has to have a benefit/cost ratio of 9.  That’s really hard to achieve, and the math is much more discouraging for any single country in the EU. Even worse, the payoff comes after pretty much everyone in office is retired or dead.

What we have here, friends, is the granddaddy of all prisoners’ dilemmas, implicit in Hedegaard’s remark “It will require a lot from Europe. If all other big economies followed our example, the world would be a better place.” Even for countries as big as China or maybe India, and even there for policies with a nice fat B/C ratio like, say, 6, the smart move if you think the rest of the world will step up and act is to do nothing and coast on it, and if you think the rest of the world won’t, to do nothing and at least not be a chump. The collapse of European will results from tacit understanding of this game structure.

Human institutions have never dealt with a situation like this at this scale. Little wonder that we are invoking magical thinking (“we’ll all get rich making windmills!”. Climate stabilization is really expensive now. It’s worth it, but not soon and not for any jurisdiction acting by itself. At times like this, only the bitterness of Ambrose Bierce suffices:

A BEAR, a Fox, and an Opossum were attacked by an inundation. “Death loves a coward,” said the Bear, and went forward to fight the flood. “What a fool!” said the Fox. “I know a trick worth two of that.” And he slipped into a hollow stump. “There are malevolent forces,” said the Opossum, “which the wise will neither confront nor avoid. The thing is to know the nature of your antagonist.” So saying the Opossum lay down and pretended to be dead.

[edited for clarity 24/I/14]


Pass the Popkern*

The British approval of the costly Hinkley nuclear power station still faces major obstacles in Brussels.

* Explanation of awful bilingual pun at end

While my American readers settle down on Tuesday night to enjoy the end of the political ambitions of Ken Cuccinelli at the hands of a Democratic party hack with zero experience in government, I’m settling in for a long comedy serial: Sir Humphrey Appleby vs. European Commission in re Hinkley Point C.

Hinkley_we_599-300x183The dying nuclear industry (my take on the economics, politics, mascot) has just scored an extraordinary win in Britain. The government will commission EDF and its Chinese partners to build the £16bn, 3.3Gw, two-reactor Hinkley C plant. It’s a fixed-price contract: but to get this protection from the high construction risks, it has had to guarantee an FIT of £92.50 ($147.9, €109.3) per megawatt-hour for no less than 35 years from the supposed completion date of 2023, indexed for inflation. And EDF will be compensated for any curtailment from wind and solar.

The FIT is double the current British wholesale price, twice the current onshore wind FIT, and considerably higher than current German non-indexed FITs for on-and offshore wind and solar. The price of both wind and solar is bound to fall; the British government accepts this, but it lowballs the trend rates. It thinks the price of solar will only decline by 3% a year, far lower than experience and typical industry forecasts.

Whatever were they thinking of? I thought this was bizarre, but nevertheless a done deal. Not in fact. Continue reading “Pass the Popkern*”

Europe Keeps Moving Right

Europe’s politics continue to move to the right, for reasons far more broad than the Euromess

I have written before about how many Americans perceive European governments as far more left-wing than they are today. This chart from The Economist is from June of 2011, but is still accurate in terms of the long-term trend of left-wing governments being put to the torch by European voters.


To which it might be replied: What about France? France elected an old fashioned Socialist government less than 18 months ago. But it’s already in big trouble. Marine Le Pen’s National Front Party, after romping to a majority victory in the Brignoles byelection, is now the leading choice of French people in the next election for the European Parliament.

Meanwhile, right next door, the new King of The Netherlands used his first speech before Parliament, which lays out the policy views of the ruling party and Prime Minister, to announce that the traditional Dutch welfare state is not sustainable.

Some attribute the rise of the European right to the Euromess, but as the chart shows, the shift started around 2000, well before the current crisis. Also, it’s not just Eurozone countries that are moving right: Norway has just elected a right-wing coalition government as well. Long-term Europe-wide factors, most notably immigration, seem more important as drivers of the rightward shift.

Treatment for drug abusing offenders: the view from Europe

Regular readers of the blog will be familiar with much of what’s currently known about how best to treat people with drug problems. Unfortunately, because so much research on that topic originates in North America, European policymakers can sometimes be left in a tricky position: either they assume that research conducted elsewhere applies similarly their side of the ocean (a justifiable assumption in some cases, to be sure), or they throw their hands up in exasperation. This problem is much less acute when we’re dealing with research on specifically medical interventions, where European research is up-to-par (and indeed superior) in many areas. But when we’re dealing with the criminal behaviours of people with drug problems, much less research comes from Europe.

Some colleagues and I recently published a study in the journal Psychology, Crime & Law that hopefully goes some way towards addressing this problem (link here for those with a journal subscription; otherwise, feel free to email me if you’d like a pdf version). We conducted a meta-analysis on the effect that treatment programmes applied to drug abusing offenders had on crime, health, and drug use outcomes. The hope was to collect everything on the topic that would give a sense of the evidence base, as long as it emanated from Europe.

After combing through nearly 40,000 titles, we found only 15 studies that were sufficiently rigorous to exclude common threats to validity (e.g., roughly equivalent comparison groups, etc). Moreover, those studies came from only six countries (eight were from the UK). Even within Europe, there’s a tremendous regional disparity in who’s doing the research on which other countries rely.

The results showed that there was a clear positive effect of treatment on criminal behaviours, illicit drug use, and physical health. Assuming a base rate of reoffending of 50%, the results corresponded to an average reduction of reoffending of 37% in the treatment groups compared to the control groups. Results were somewhat more mixed for psychological health outcomes, and for illicit drug use after we disaggregated the outcomes based on particular types of drugs.

One of the main conclusions of the paper will not be news to those who follow what others on this blog have been saying for years. If we can persuade policymakers to endorse the proposition that the quantity of drugs consumed might not need to change in order to 1) decouple the drug-crime connection, 2) provide a safe, stable position in which to manage other complications arising from someone’s drug addiction, then we might be able to make serious progress.

For those who wondered whether European evidence points in a similar direction to North American research, this paper suggests that it does. In fact, the results of our meta-analysis are even more positive than what was observed in previous reviews. However, this should be taken cautiously, both because of the erratic properties of small sample sizes, and because of the over-representation of evaluations of pharmacological substitution treatments in our sample (which generally show particularly good effects).

If you’d like a copy of the paper, but you don’t have journal access, you’re welcome to email me at [myfirstinitial][koehler][@][berkeley]”dot”[edu]

What Detroit means

The first thing I thought about Detroit is that the state’s appointment of a receiver demonstrated the Republican governor’s profound indifference to the democratic process of a Democratic city, not to mention a white governor’s profound indifference to a black city.   This may be true, but it’s also true that Detroit’s finances are such a catastrophe that, like New York in the 1970s, it seems to need an outsider to get its house in order. It helps that the trustee is African-American, though not very much: even temporary government without the consent of the governed should cause us alarm.

The second thing I thought about Detroit is that selling off the collection of the Detroit Institute of Art, which the trustee estimates would be sufficient to retire all of the city’s debt, is the best of a number of bad options. Museums nationwide are hyperventilating at the prospect, but they also think it’s sensible to keep on hand huge numbers of items that no one ever sees.  I don’t quarrel with the need to have a deep collection for research purposes, but I also don’t see why it’s considered bad form verging on unethical to sell the parts of the collection you’re not using in public to sustain the parts of the collection you ARE using in public, and at the same time not coincidentally making the sold pieces available to the public, albeit in a different location.

If there had been a Great Fire of Detroit, and the whole city destroyed, no one would argue that recreating the city’s art collection should take priority over food and shelter for the city’s people.  The years of financial mismanagement have incinerated Detroit just as surely as a physical fire; why shouldn’t we pay more attention to basic needs than to cultural institutions?

And isn’t the whole function of assets to provide financial security when income doesn’t suffice? Again, I wonder about the racial composition of those who champion the inviolability of the collection as against the racial composition of those who think it might be necessary to dispose of it. The state’s Attorney General has opined that the city may not sell them because they’re held in trust for the citizens.  But “The United States shall guarantee to every State in this Union a Republican Form of Government,” and I don’t notice anyone’s raising a ruckus about the loss of that part of our patrimony.

The third thing I thought about Detroit is that the bondholders’ interests are being given absolute priority over the interests of current and former employees, whose pensions are at stake. This is the case in Illinois as well, where at least some portion of the pension “crisis” could be solved by refinancing the debt and stretching out repayment but where that solution is not even considered because the bondholders don’t like it. I understand the value of the municipal bond market to cities’ ability to expand infrastructure but municipal bond investors are investors and should be prepared to accept some pain when they toss their dollars into what’s obviously a money pit.

And the fourth thing I thought about Detroit is that it’s Americans’ closest analogue to what’s casually referred to as “the European debt crisis,”  throughout which salvaging the Euro has meant satisfying bondholders at the expense of people who’d like to work or collect their pensions.   Very few commentators seem aware that the real crisis is one of self-government (or its destruction), or that the Germans have managed to do through economics what they couldn’t do through war, that is, run Europe.  When externally-imposed austerity hit Greece, all I could remember was the bumper sticker from the era of the junta: “Greece: Democracy born 508 BC, died 1967 AD.”  Or, this time around, “reborn 1974, killed again 2011 or -12 A.D.”  As the saying goes, same s**t, different day.

Back to Detroit: if I were trustee, I’d sell off DIA’s assets in a heartbeat and use the proceeds to protect employee pensions. If there was anything left for the bondholders, fine; if not, too bad: it’s the pensioners who paid their share and are entitled to what they were promised. Even after years of trashing public employee unions (brought to you by the Heritage Foundation and other fronts for wealthy people who don’t like to pay taxes or see working people make reasonable money), there must be some court somewhere willing to recognize that the obligation of contracts shall not be impaired.

Of course, I would never be chosen trustee, but that’s not the point. The point is, my solution is what would happen if Detroit were still governed by its people. Detroit: Democracy died 2013 A.D.

A Sobering View of Valentine’s Day

It being Valentine’s Day today, I suppose it’s as good a time as any to think about healthy and unhealthy relationships. In that vein, I give a brief overview below the fold of some recent developments in European domestic violence perpetrator rehabilitation.

Continue reading “A Sobering View of Valentine’s Day”

David Cameron’s EU magical mystery tour

Cameron’s hopeless plan to renegotiate undefined EU reforms and hold an in/out referendum in Britain on the results.

David Cameron has just taken a colossal gamble with the future of his and my country and of Europe.
union-jackIn a speech delivered at the Bloomberg offices in London on 23 January - symbolic of the Tories’ true heartland, the City - he committed his party to this:

The next Conservative manifesto in 2015 will ask for a mandate from the British people for a Conservative government to negotiate a new settlement with our European partners in the next parliament.

It will be a relationship with the single market at its heart.

And when we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice. To stay in the EU on these new terms, or come out altogether …..
[At the end]:
And when the referendum comes let me say now that if we can negotiate such an arrangement, I will campaign for it with all my heart and soul.

Commentators are talking about the referendum in 2017, but that date is not in the speech. It would be surprising if it were that soon.

Cameron has been under immense pressure from his party to hold a referendum on Europe. The “let’s negotiate first” is thus a clever triangulation that may allow him to keep Britain in the EU. Perhaps too clever. He may fail and lead Britain out of the EU; or perhaps just England and Wales, if the gambit drives the Scots to ditch the Union in their own referendum.

What, you ask, are Cameron’s demands? Unbelievably vague. When Maggie Thatcher went for Brussels with her handbag, her demands for a budget rebate were unwelcome but perfectly clear and hence negotiable. Cameron’s are a bag of half-articulated grievances, not a negotiating position at all. You can’t negotiate with a blancmange.

Still. let’s try and guess what what Cameron’s “five principles” might translate to actual demands, and what chance he has of getting them.. Continue reading “David Cameron’s EU magical mystery tour”

Sandy Claus was coming to town

The precautions against superstorm Sandy worked because the US government FEMA listened to a European computer forecast, not its own.

We need something seasonable to cheer us up, not contemplating Republicans in Congress, narcotics, guns, gun apologists, and - far the worst - the faces of small children. So let’s take a short trip down memory lane to your friendly ex-hurricane:

Tropical storm Sandy at midnight on 28 October

Source: NASA via The Telegraph, approximate scale bar added by me

Where is the silver lining? Two actually. The first is the fact that Sandy was about the smallest storm still large enough to shift public and élite opinion on the reality, now, of climate breakdown. If you pay attention to the plague of frogs, you just may escape the cull of the firstborn. The second is much less widely known outside the weather forecasting trade, and a reminder of just how important it is. Continue reading “Sandy Claus was coming to town”

An ambitious target: Greek power cuts

Greek (and of course German) electricity is much more reliable than American.

A statistic you probably don’t know is SAIDI, system average interruption duration index. It means the average number of minutes per year for which the customers of an electricity network are deprived of power, not counting short interruptions of 1-5 minutes, planned interruptions, or “extreme weather events”. It’s one of the two main internationally agreed indicators for grid reliability. Its sibling SAIFI is an indicator of power cut frequency, and is less significant for most customers.

What is it in the USA? Continue reading “An ambitious target: Greek power cuts”

The pain in Spain again

Spanish labour costs are painfully converging with German ones.

The fragment of the US blogosphere that pays any attention to Europe is still full of gloom about the prospects for the Eurozone. See for instance Kevin Drum. But here’s a ray of light from the very experienced insider Gavyn Davies, blogging in the FT:

The good news is that Spain has in fact improved its competitiveness markedly in recent years, as a result of the reductions in labour costs which have accompanied the recession and structural reforms in the labour market:

The chart actually understates the improvement. Continue reading “The pain in Spain again”