vrijdag 27 april 2012

At least they read my CV

Just got this in my mailbox:

Dear Rolf Adriaan Groeneveld,

As stated by the Wageningen Agricultural University's electronic repository, you authored the work entitled "development of a bioeconomic fisheries model with predatory relations between species" in 2000 within the framework of your postgraduate degree.
Due to the fact that we are currently planning publications in this subject field, we would be pleased to know whether you would be interested in publishing the work mentioned above with us.

LAP LAMBERT Academic Publishing is a member of an international publishing group which has almost 10 years of experience in the publication of high-quality research works from well-known institutions across the globe.
Besides producing printed scientific books, we also market them actively through more than 80,000 booksellers.

Kindly confirm your interest in receiving more detailed information in this respect.

I am looking forward to hearing from you.

Best regards,

Laura Dean
Acquisition Editor

(address, telephone number, etc)

My first reaction: "Huh? Did I write that?" My reaction after some googling: "Oh. That's how I describe my minor thesis in my CV." My reaction after some more googling and finding this: "Better not."

Honestly, I get loads of garbage like this lately.

(Edited 21 May 2012 to remove contact info)

Seeing red about diesel

It's just unbelievable. VVD (sort-of-libertarian), CDA (christian centrist) and PVV (right-wing populist) just spent weeks haggling over a new budget. Finally the whole thing blew up, we're getting new elections in September, but in the meantime CDA and VVD managed to agree with a bunch of other parties, including the Green Left (yes, that's their name) and the sort-of-liberal D66, within 48 hours. Was it really that easy? What have they been doing in those past weeks?

Anyway, part of the deal is a tax increase on so-called 'red diesel', i.e. diesel with a lower tax rate than regular diesel. It is only allowed in such machines as tractors, road maintenance equipment - and all non-recreational ships. No wonder Dutch fishers are up in arms. Fuel is one of the major expenses of Dutch bottom trawlers.

I hate to say this, but as an economist I don't see a reason to exempt any economic sector from a tax, let alone a tax on fossil fuels. If farmers and fishers pay a lower tax rate, why not trucks? Or salesmen? As we're on it, why not abolish the tax altogether? Oh wait - there's state coffers to fill and negative externalities to tax. But in any case, I think we should have a level playing field for all, and that includes a similar tax rate for all.

maandag 23 april 2012

Stuff I do: Competing Claims on Natural Resources

Here is a project I like to tell students about to make them aware that conservation comes at a price. It was on Dutch television last summer:

If you don't understand Dutch: the project is called Competing Claims as it investigates conflicts between wildlife conservation and the livelihoods of local residents. To put it bluntly, it is very easy for a Dutch granola-munching environmental student to argue for conservation of elephants and lions, but if you're a farmer near the park fence and you can hardly earn a decent living while elephants trample your crops and lions eat your cattle (or your son), you're probably less than enthousiastic.

These conflicts are terribly difficult to solve, but one step in the right direction is to make explicit who is affected, how they are affected, how serious the effects are, and what tradeoffs are present. Economics can play a modest role in this by analysing those tradeoffs, and assessing economic impacts.

vrijdag 20 april 2012

Here we go again

Kalle Lasn, founder and editor of Adbusters magazine, says in the latest edition of Solutions Journal:

"I predict we’re going to move away from large occupations of parks and we’ll have surprise, one-day occupations of banks and corporations and the economics departments of universities"

There you have it: banks, corporations, economists. All latter-day Scrooges. Further down the interview:

"I hope you tell [Herman Daly and Robert Costanza, founders of ecological economics] that from my perspective their ideas are reaching fruition, and I wish they would encourage their followers to be more aggressive. Suddenly, old and young people are pushing against the system and it’s time for ecological economists to stand up and be counted and not just play academic games in the background. Joseph Stiglitz actually went to Zuccotti Park and gave a talk. We need more of that. We need them to champion their paradigm.

We also don’t have full cost accounting. There is a dream among Occupiers to have a global market where products show their ecological cost, which would reflect their true cost. They will find that the price of cars goes up and bikes goes down. Maybe that McDonald’s napkin could suddenly have a certain price to it. And apples from New Zealand would have a different price. How much does all that stuff from China going to Walmart truly cost in environmental damage?"

Lasn's "full cost accounting" is called a "Pigouvian tax" in any mainstream, neoclassical, economics text book. It's really not that controversial.

maandag 16 april 2012

I can refer to The Cure at the next EAERE conference

Anyone who had a radio in the 1980s should know these lyrics:

Misjudged your limits
Pushed you too far

It neatly describes my paper with Christopher Costello and Michael Springborn that has just been accepted for presentation at this year's EAERE conference in Prague. The general idea of the paper is this: you are doing something you like, and the more intensively you do it the more you like it. There is a danger, however, of going too far, and if you go too far something nasty happens. Your problem is, you don't know how far is too far. Will you stay on the safe side? Will you experiment to find out what 'going too far' actually means? How much will you experiment? When do you stop experimenting? And how does this all depend on what you already know, and the consequences of crossing the line? That is what the paper is about.

You may wonder what this has to do with the economics of ecosystems. There are several examples of ecosystems suddenly collapsing under man-made pressures such as pollution or exploitation. The most well-known example of this is the shallow lake. You can add phosphorus to a clear shallow lake without noticing any effects, until the phosphorus content crosses a line and the lake suddenly turns turbid. This regime shift, as ecologists call it, happens all of a sudden. It is not like your pasta boiling over, where you can turn the gas down to limit the damage when it happens. And it matters economically whether the lake is clear or turbid: swimmers, anglers and divers prefer clear lakes to turbid ones, so you could lose a lot of recreational values. Moreover, reversing the process is expensive: you need to reduce the phosphorus content to a level much lower than the level that triggered the shift to the turbid state. In many cases you also need to fish intensively for species like bream, because bream enhance the turbid state by stirring up the bottom when they look for food. (By the way, Wageningen University's Mister Shallow Lake, Marten Scheffer, used to play in one of the most legendary Dutch folk bands.)

While working on the paper I realised the problem is actually quite general. The captain of the Costa Concordia faced a similar decision: the closer he got to the Giglio shore to make his salute, the more likely he was to run aground. In his case the consequences of "going too far" are huge: at this moment 30 passengers are confirmed dead while two are still missing.

On a lighter note, Robert Smith describes the same problem in those lines quoted above. I take it he spent just a tad too much time in the pub, at least more than he thought his girlfriend would accept. In some relationships this may cost no more than a box of chocolates, but in the song he loses his relationship altogether. At least he got a hit single out of that experience.

zondag 15 april 2012

And now for something completely different

The picture on the right was taken on the first day of this year's Roadburn festival. The venue you see is Het Patronaat (formerly an annex to the nearby catholic church) although most concerts are in 013. For lovers of psychedelic/sludge/stoner/post/doom/whatever rock, Roadburn is the place to be. I mostly prefer the stoner and desert rock bands (I still regret not having seen Fatso Jetson in their own cafĂ© when I had the chance), but occasionally you see stuff you thought you'd hate but that turns out to be actually quite good. My revelation this year was Sleep, which I thought nothing special on CD but was very convincing on stage.

Another devout Roadburner
Getting a ticket to Roadburn is no easy task: last year tickets were sold out in 15 minutes when they came on sale at 10am CET. Nevertheless, it has a very international audience with visitors from all over Europe and even the United States. That's right: some folks on the American east coast are willing to stay up at 4am to buy a ticket so they can cross the Atlantic Ocean to Roadburn.

One thing I have never understood though: does it really have to be this LOUD? I know the question sounds lame, but at some concerts at least half the audience wears earplugs. I also wear them - I mean, if you're a music lover your ears should be precious to you. It's not just about hearing loss, I once met somebody whose hyperacusis almost drove him to suicide. So why not put the volume down a bit?

woensdag 11 april 2012

Illegally obtained evidence in whaling research?

Apparently some biology journals refuse to publish research on whales if data for that research come from commercial whaling, as this paper in the ICES journal describes. Frankly the authors (all from a Norwegian research institute) are not happy with that.

I am no legal expert so I don't know whether such research is a case of illegally or improperly obtained evidence. I understand why such evidence is not accepted in court: you don't want to encourage police officers breaking the law themselves to catch a criminal. By the same token, you don't want to encourage researchers breaking international treaties for their research.

Nevertheless, I have mixed feelings about the international whaling bans. I once made this picture on the Bergen Fish Market:

Yes, I tried whale meat. It's not exactly a delicacy. I also asked what species it was and they told me it was minke whale. If you check minke whale in the IUCN Red List you will find the species is not threatened in any way. But what about the species next to the whale meat? There are many different eel species, but the eel you buy in most shops is European Eel - critically endangered, according to the IUCN Red List.

Why do we eat eel, which is on the brink of extinction, while we get so upset about minke whale, which is so abundant? I admit: smoked eel tastes much better than whale meat.

zondag 8 april 2012

Why economists argue with ecologists (2): what is economics?

Tom Tietenberg once told somebody he is an environmental economist, and the person reacted: "Isn't that a contradiction in terms?" People tend to think in terms of "economy versus environment" where "economy" means "overpaid fat cats screwing the planet for a dime with their filthy industries" and "environment" means "the poor polar bear that gets screwed for the fat cat's dime." If you put it that way an economist can only be the fat cat's stooge.

Of course I wouldn't be writing this if I thought it were true - better to keep the conspiracy a secret, right? So indeed I think it is not true. For starters, there are a lot of policies that economists generally recommend but that are not necessarily in the interest of the fat cats, such as anti-trust laws to limit monopoly power, a tax on environmental pollution, and abolishing subsidies or protectionism. Economists recommend such policies because they are likely to increase the welfare of society as a whole.

Mind you: welfare is not the same as your income, or the money on your bank account. You can be filthy rich, but thoroughly unhappy, if you cannot go out without a gas mask. That is because our welfare depends on more than just the money we earn or own, or the goods and services we can buy with it. There are lots of other things we need in life that we cannot trade on a market, such as clean air, or the bird song in your garden. Moreover, a lot of the stuff we do trade on markets depends on what you may call nature's goods and services. Our fruit and vegetables would be a lot more expensive if farmers had to do all the pollination by themselves, but luckily bees do the work for them. And there are loads of examples like this.

The problem with all this is that it all hangs together. Want to spray your crops to get rid of pest insects? Then be aware that you may also kill the bugs that do good things, such as bees and bumblebees. Want to build a shrimp farm in this mangrove forest? Then be aware that the next tsunami may do a lot more damage than the last one. An economist's job is to analyse those tradeoffs, and help policy makers make the right decision. Maybe growing shrimp turns out to generate more welfare than conserving the forest, but it might just as well be better to conserve the forest. You don't know that unless you perform a good analysis of these issues.

So economists do not always prefer 'factories' over 'polar bears', or vice versa. Nevertheless, most of them will put man in the middle, and ask the question "what do these policies mean for Homo sapiens?" Because of this economists are always the ones asking the Nasty Question: "Why do you want to conserve this forest?" And in analysing the tradeoffs we make a few strong assumptions of our own. I'll get back to that in later posts.

zondag 1 april 2012

Joris' latest adventure

Joris Luyendijk is one of my favourite journalists. As a student he stayed in Cairo for a year, which resulted in a very insightful book on the views of young Egyptians. As far as I know the book only appeared in Dutch, but its title is roughly translated as "A good man sometimes hits his wife", which is a quote of one of his female (!) fellow students who insisted she would leave a man who did not occasionally hit her. After working as a correspondent in the Middle East he made many people lose their faith in foreign journalism with his book "People like us: Misrepresenting the Middle East". He is a bit of a maverick in journalism world.

But now he has traded the Middle East for another battle field: banking. His blog on the Guardian website features several in-depth interviews with people working in what must be the most hated industry of our time. I must admit it gets tedious after a while: most of the interviewees insist they are doing very complex stuff, they work insane hours, what they are doing is very different from those cowboys down the street so don't accuse them of gambling away your pension money, bla bla bla. You can also put question marks over the goals of the blog. Although it is presented as an anthropological study I doubt whether an anthropology journal would accept a paper on such a biased sample of the population (or I would lose faith in anthropology as much as I have in foreign journalism). The interviewees come to Joris on a voluntary basis, whereas most bankers (anyway the most high-ranking ones) have signed all kinds of non-disclosure contracts with their bosses. So the ones coming to Joris are either frustrated with their current or former employers, or they are foot soldiers with little insight into what happens at the top. And how many bankers read the Guardian? (How many social workers read the Wall Street Journal?)

Nevertheless it is an insightful blog as it gives at least a glimpse of what it must be like to work in banking. What strikes me most is the diversity in companies, products and jobs, and the culture that seems to combine gung-ho chauvinism (it's not an easy working environment for women) with almost perfect colour blindness (several bankers from Asian or African descent say what they like most about the sector is its ethnic diversity). But more insightful than the interviews themselves are the comments. Some are from those few bankers who do read the Guardian, and their views help looking at the content from a different angle. The sheer vitriol expressed by the majority of commenters, however, is another interesting learning experience - at least now I know about the Peterloo Massacre. Apparently, to the average Guardian reader, bankers bathe in the blood of little children to keep their skin smooth. Or something like that.

My views tend to be on the boring side of this debate. As most interviewees stress, banking is a hugely diverse sector. Holding all bankers responsible for the current mess is like holding all manufacturing responsible when a fireworks factory blows up. This does not mean there is nothing wrong with some sectors within banking. Greg Smith's j'accuse against Goldman Sachs illustrates that there can be huge information asymmetries in banking, i.e. one party in a transaction knows a lot more about the product being sold than the other party, which opens the possibility for a lot of rip-offs. My economics textbooks tell me that competition should drive out the not-so-knowledgable parties in favour of the well-informed ones. It does not explain, however, why this does not happen. In my view all kinds of market failures (transaction costs, mostly) and the fact that many of the less knowledgable parties are governmental bodies make that there are still plenty of suckers ('muppets' in banker lingo) around. Economics has ignored this fact for too long: we should do more field work, observe what happens, and develop a better understanding of factors like transaction costs, information asymmetry, and so on.