Gerry Canavan

the smartest kid on earth

Posts Tagged ‘economics of catastrophe

World-Historical Incompetence

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I agree with basically everything Adam Kotsko says here, except that my career is only about to be derailed by a financial crisis (as opposed to having already been derailed). Notably:

In addition, given the fact that this option exists, I believe that if Obama chose to obey the debt ceiling and defaulted on U.S. debt, he would be willfully causing a global financial crisis at a time when the economy is (in part due to the failures of his own policies) still extremely weak. Given the special role of U.S. debt in the global economy, it seems likely that said crisis would be the worst in the entire history of capitalism — if the collapse of one particular asset class reputed to be of AAA quality (CDOs, i.e. securitized mortgages) caused such chaos, what would happen when the gold standard of safe investments collapsed?

One thing’s for certain: the amount of human suffering that would result would be staggering, quickly shooting Obama up the list of “History’s Greatest Monsters.” In addition, he would be creating a situation in which someone like Michelle Bachmann could realistically be elected president, most likely creating a constitutional crisis of quite a different order.

I wish I knew for sure that Obama wouldn’t let that happen.

And, right on cue…

In addition to his warnings about the cost of a default, officials said, Mr. Geithner told the lawmakers the White House did not believe it had the authority, under the Constitution, to continue issuing debt if it reached the debt ceiling. Nobody in the room disputed Mr. Geithner’s bleak assessment, the officials said.

A Classic Bad News/Good News Situation

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Classic bad news/good news situation: Sure, Iceland’s economy has completely collapsed, but at least it caused McDonald’s to leave the country.

Written by gerrycanavan

October 26, 2009 at 11:53 pm

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Climate Change vs. GDP

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Nate Silver demolishes a new talking point that climate change will only reduce global GDP by 5% in one hundred years. Taking that very questionable assumption at face value, Nate writes:

Let’s see how much of the world we can destroy before getting to 5% of global GDP. The figures I’ll use are IMF estimates of 2008 GDP, for all countries bit Zimbabwe where the IMF did not publish a 2008 estimate and I use 2007 instead.

Zimbabwe, indeed, is the first country on the chopping block, whose 11.7 million greedy bastards consume a whole 0.0196 percent of the world’s output — a global low of just $55 per person. After that, we get to destroy Burundi, The Congo (the larger of the two Congos — the one that used to be called Zaire), Liberia, Guinea-Bissau, Eretrea, Malawai … do you really me to go through the whole list? You do? … Malwai, Ethopia, Sierra Leone, Niger, Afghanistan (big problem solved there), Togo, Guinea, Uganda, Madagascar, the Central African Republic, Nepal, Myanmar, Rwanda, Mozambique, Timor-Leste, the Gambia — we’ve only used 0.27 percent of GDP to this point, by the way — Bangladesh (which has 162 million people), Tanzania, Burkina Faso, Mali, Lesotho, Ghana, Haiti, Tajikistan, Comoros, Cambodia, Laos, Benin, Kenya, Chad, The Soloman Islands and Kyrgyzistan. Next up is India, which, while growing, still consumes only 2 percent of world GDP. Then Nicaragua, Uzbekistan, Vietnam, Mauritania, Pakistan (another problem solved), Senegal, São Tomé and Príncipe, Côte d’Ivoire, Zambia, Yemen, Cameroon, Djibouti, Papua New Guinea, Kiribati, Nigeria (another pretty big country — we’ve now got only about 1.4 points of GDP left), Guyana, the Sudan, Bolivia (our first foray into South America), Moldova, Honduras, the Philippines, Sra Lanka, Mongolia, Bhutan and Egypt.

At this point, we’ve used up 4.4 points of GDP. Indonesia is next on the list of lowest per-capita GDPs. But unfortunately we can’t quite fit them into the budget so we’ll spare them, opting instead for Vanauatu, Tonga, Paragua, Morocco, Syria, Swaziland, Samoa, Guatemala, Georgia (the country — not the place where they have Chik-Fil-A), the other Congo, and Iraq. Skipping China, we then get to Armenia, Jordan, Cape Verde, the Maldives — and another big bunch of skips follows here since we’re very low on budget — Fiji and finally Namibia. Collectively, these countries consume 4.99997 percent of the world’s GDP. There’s absolutely no budget left for anyone else — not even St. Vincent and the Grenadines, which would be a great band name, BTW.

So, we’ll have to settle for just these 81 countries, which collectively have a mere 2,865,623,000 people, or about 43 percent of the world’s population.

Written by gerrycanavan

June 29, 2009 at 1:15 pm

The Economics of Catastrophe

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The economics of catastrophe: Climate Progress critiques a recent Paul Krugman post on Marty Weitzman and Bjørn Lomborg. Here’s the key point:

Harvard economist Martin Weitzman has a new paper in which he points out that the vast majority of conventional economic analyses of climate change should carry the following label:

WARNING: to be used ONLY for cost-benefit analysis of non-extreme climate change possibilities. NOT INTENDED to cover welfare evaluation of extreme tail possibilities, for which a complete accounting might produce ARBITRARILY DIFFERENT welfare outcomes.

In short, if you don’t factor in plausible worst-case scenarios — and the vast majority of economic analyses don’t (this means you, William Nordhaus, and you, too, Bjørn Lomborg) — your analysis is useless.

Written by gerrycanavan

July 30, 2008 at 1:22 am