Category: Economics

Matters of money

Oil prices below break-even

The Guardian is reporting that global oil prices are at less than half of the cost of production in Saudi Arabia, contributing to a budget deficit of 20% of GDP.

For the same reason raising fossil fuel prices with a carbon tax is expected to reduce demand, it can be expected that lower fossil fuel prices will lead to more usage. At the same time, low oil prices could be the result of global economic weakness, in which case the amount of fossil fuel consumed may not rise much even with falling prices. In the longer term, low oil prices almost certainly reduce investment in the development of new oilfields, pipelines, refineries, and so on. Given the urgent need to stop investing in such projects to control climate change, low oil prices may be at least partly desirable from a climate change perspective.

The plausibility of driverless cars

There is a widespread expectation that autonomous or driverless cars of the sort being developed by Google will soon become commercially available and active on public roads. A recent Slate article makes some strong arguments for why that expectation may be premature:

But the maps have problems, starting with the fact that the car can’t travel a single inch without one. Since maps are one of the engineering foundations of the Google car, before the company’s vision for ubiquitous self-driving cars can be realized, all 4 million miles of U.S. public roads will be need to be mapped, plus driveways, off-road trails, and everywhere else you’d ever want to take the car. So far, only a few thousand miles of road have gotten the treatment, most of them around the company’s headquarters in Mountain View, California. The company frequently says that its car has driven more than 700,000 miles safely, but those are the same few thousand mapped miles, driven over and over again.

Another issue is what will happen to driverless cars when they get into a situation where they cannot function (say, a construction site includes temporary stop lights, or you turn onto a road which isn’t mapped)? I can’t see passengers being very happy when their car simply won’t go anywhere anymore, and they need to abandon it and find some other form of transport.

Ultra-processed foods

New dietary guidance from the Heart and Stroke Foundation warns against “ultra-processed foods”, those that are “nutritionally unbalanced foods high in sugar, fat and salt manufactured in a way to promote over-consumption and are associated with weight gain and high blood pressure”. They include “soft drinks, packaged fruit juices, cookies, ice cream, salty snacks, ready meals and bottled sauces”.

With money tight and limited access to food storage and cooking facilities on campus, I have definitely been eating too much of this sort of stuff.

The machinations of the food and flavour industries are fairly disturbing:

Open thread: 2015 federal election

Stephen Harper’s Conservatives won their first minority in Canada’s 39th general election in 2006, defeating the Liberals under Paul Martin with 124 seats to 103.

In 2008, the Conservatives did better against the Liberals under Stéphane Dion, ending up with 143 and 77 seats respectively.

In 2011, the Conservatives won a majority government with 166 seats. The Liberals under Michael Ignatieff fell to 34 seats and the NDP became the official opposition under Jack Layton.

On October 19th, we will have our 42nd general election. Polls suggest the NDP is most likely to win, but a lot can still change and may outcomes seem possible.

In the long run, I think Canada would be best off if the Liberals and NDP merged into a Liberal-Democratic Party that will be consistently capable of competing with a united right-wing. I respect the fear some people have that a system dominated by two parties will lead to US-style politics. At the same time, Canada’s parliamentary system with executive-legislative fusion has quite distinct characteristics from the US presidential/congressional split.

When it comes to climate politics, we can’t have policies that get reversed with every change of government. Libertarians and conservatives need to acknowledge what we are doing to the planet and endorse effective policies for responding to it. Continued delay will only increase the eventual need for government intervention.

Sweden

As a long-time student of politics, I often find myself wondering if Sweden simply has public policy basically figured out and everyone else is just screwing it up or governed by self-interested elites.

Would nearly all countries be better off imprisoning their politicians and high-level civil servants, bringing in some Swedish politicians and bureaucrats, and then having the newcomers exact sensible public policies across the board?

After finishing my PhD at U of T, the idea of moving to Sweden for at least 2-3 years has a lot of appeal at the moment.

Joe Oliver sit-in

Today there was a student sit-in at the constituency office of MP and Minister of Finance Joe Oliver. The students were calling for an end to Canada’s ineffective and harmful climate change and energy policies.

Six other sit-ins took place, attempting to meet with other MPs across Canada.

On Sunday, the major March for Jobs, Justice, and the Climate will be happening in Toronto: moving from Queen’s Park to Allan Gardens.

Collier on plunder and romanticism

Plunder and romanticism are so rife precisely because ordinary citizens are insufficiently informed about the opportunities and threats that nature poses to have forced governments into effective regulation. In the task of building an informed citizenry the starting point is an ethics of nature that people in societies with widely different value systems can understand and accept. Neither the romantic variant of environmentalism that sees nature as an end in itself, nor the austere universalism of economic Utilitarianism, can provide such a foundation. The most difficult wars to win are those that must be fought on two fronts. It is more straightforward, psychologically more satisfying and dramatic to have only a single enemy. The romantics among environmentalists and the Utilitarian Platonic Guardians among economists see nature as a single-front war. The romantics regard economic growth as the enemy; the Platonic Guardians regard the values of ordinary citizens as the enemy. But most struggles in development are not like that: sanity lies in the middle rather than at the extremes. Aid provides an example. It is neither a panacea nor a menace.

Collier, Paul. The Plundered Planet: Why We Must – and How We Can – Manage Nature for Global Prosperity. 2010. p. 12 (paperback)