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The Arrogance of Model Makers

crichton

From a lecture given at Caltech by writer Michael Crichton in 2003 entitled Aliens Cause Global Warming

Stepping back, I have to say the arrogance of the model-makers is breathtaking. There have been, in every century, scientists who say they know it all. Since climate may be a chaotic system-no one is sure-these predictions are inherently doubtful, to be polite. But more to the point, even if the models get the science spot-on, they can never get the sociology. To predict anything about the world a hundred years from now is simply absurd.

Look: If I was selling stock in a company that I told you would be profitable in 2100, would you buy it? Or would you think the idea was so crazy that it must be a scam?

Let’s think back to people in 1900 in, say, New York. If they worried about people in 2000, what would they worry about? Probably: Where would people get enough horses? And what would they do about all the horse****?

Horse pollution was bad in 1900, think how much worse it would be a century later, with so many more people riding horses? But of course, within a few years, nobody rode horses except for sport.

And in 2000, France was getting 80% its power from an energy source that was unknown in 1900. Germany, Switzerland, Belgium and Japan were getting more than 30% from this source, unknown in 1900. Remember, people in 1900 didn’t know what an atom was.

They didn’t know its structure. They also didn’t know what a radio was, or an airport, or a movie, or a television, or a computer, or a cell phone, or a jet, an antibiotic, a rocket, a satellite, an MRI, ICU, IUD, IBM, IRA, ERA, EEG, EPA, IRS, DOD, PCP, HTML, internet. interferon, instant replay, remote sensing, remote control, speed dialing, gene therapy, gene splicing, genes, spot welding, heat-seeking, bipolar, prozac, leotards, lap dancing, email, tape recorder, CDs, airbags, plastic explosive, plastic, robots, cars, liposuction, transduction, superconduction, dish antennas, step aerobics, smoothies, twelve-step, ultrasound, nylon, rayon, teflon, fiber optics, carpal tunnel, laser surgery, laparoscopy, corneal transplant, kidney transplant, AIDS. None of this would have meant anything to a person in the year 1900. They wouldn’t know what you are talking about.

Now. You tell me you can predict the world of 2100. Tell me it’s even worth thinking about. Our models just carry the present into the future. They’re bound to be wrong. Everybody who gives a moment’s thought knows it.

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Racial Latte

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Shutting Down Startups

lemonade-stand

Perhaps nothing reflects the descent of the Yeomanry better than the fading role of the ten million small businesses with under 20 employees, which currently employ upwards of forty million Americans. Long a key source of new jobs, small business startups have declined as a portion of all business growth from 50 percent in the early 1980s to 35 percent in 2010. Indeed, a 2014 Brookings report revealed that small business “dynamism,” measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter century.

This decline in entrepreneurial activity marks a historic turnaround. In 1977, Small Business Administration figures show, Americans started 563,325 businesses with employees. In 2009, they launched barely 400,000 business startups, long a key source of new jobs, which have declined as a portion of all businesses from 50 percent in the early 1980s to 35 percent in 2010.

There are many explanations for this decline, including the impact of offshoring, globalization, and technology. But in part it reflects the impact of the ever more powerful Clerical regime, whose expansive regulatory power undermines small firms. Indeed, according to a 2010 report by the Small Business Administration, federal regulations cost firms with less than 20 employees over $10,000 each year per employee, while bigger firms paid roughly $7,500 per employee. The biggest hit to small business comes in the form of environmental regulations, which cost 364 percent more per employee for small firms than for large ones. Small companies spend $4,101 per employee, compared to $1,294 at medium- sized companies (20 to 499 employees) and $883 at the largest companies, to meet these requirements. 20 The nature of federal policy in regard to finance further worsened the situation for the small- scale entrepreneur. The large “too big to fail” banks received huge bailouts, yet they have remained reluctant to loan to small business. The rapid decline of community banks, for example, down by half since 1990, particularly hurts small businesspeople who have depended historically on loans from these institutions.

From The New Class Conflict by Joel Kotkin

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IPCC Conflict of Interest

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From The Heartland Institute, Patrick Moore, a founder of Greenpeace, writes Why I am a Climate Change Skeptic

Excerpts:

By its constitution, the IPCC has a hopeless conflict of interest. Its mandate is to consider only the human causes of global warming, not the many natural causes changing the climate for billions of years. We don’t understand the natural causes of climate change any more than we know if humans are part of the cause at present. If the IPCC did not find humans were the cause of warming, or if it found warming would be more positive than negative, there would be no need for the IPCC under its present mandate. To survive, it must find on the side of the apocalypse.

The IPCC should either have its mandate expanded to include all causes of climate change, or it should be dismantled.

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Keynes and Stable Prices

Economist John Maynard Keynes

from the biography John Maynard Keynes by Robert Skidelsky;

Keynes was unusual in his stress on the ‘stickiness of social and business arrangements’ and the need it created for completely stable prices if capitalism was to be consistent with social stability. Inflation, he says, inflicts most injury by altering the distribution of wealth; deflation by retarding the production of wealth. In the first case, businessmen gain at the expense of savers and most workers whose incomes are fixed (in the short run), while their value falls. This is good for business, but undermines capitalism in the long run, by turning entrepreneurs into profiteers and drying up the supply of savings.  Falling prices on the other hand injure output and employment by imposing windfall losses on businessmen, whose major costs of production (including wage costs) remain fixed in the short run, while the selling prices of their products fall. In the deflationary case, ‘the fact of falling prices injures entrepreneurs; consequently the fear of falling prices causes them to protect themselves by curtailing their operations’.  Thus ‘a comparable weak initial impulse may be adequate to produce a considerable fluctuation.’

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HKO

I would add that in addition to stable prices, there is also a need for stability in regulation. Constantly changing rules and tax rates and the expectation that this will persist kills the stable environment needed for long term capital investment and economic growth.