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The reason we are talking about inequality is because we are talking about inequality. I suppose the SJW can take credit for “raising awareness:”

Misperceiving Inequality
by Vladimir Gimpelson, Daniel Treisman  –  #21174 (POL)

Since Aristotle, a vast literature has suggested that economic inequality has important political consequences.  Higher inequality is thought to increase demand for government income redistribution in democracies and to discourage democratization and promote class conflict and revolution in dictatorships.  Most such arguments crucially assume that ordinary people know how high inequality is,
how it has been changing, and where they fit in the income distribution.  Using a variety of large, cross-national surveys, we show that, in recent years, ordinary people have had little idea about such things.  What they think they know is often wrong. Widespread ignorance and misperceptions of inequality emerge robustly, regardless of the data source, operationalization, and method of measurement.  Moreover, we show that the perceived level of inequality–and not the actual level–correlates strongly with demand for redistribution and reported conflict between rich and poor.  We suggest that most theories about political effects of inequality need to be either abandoned or reframed as theories about the effects of perceived inequality.

My amazing colleague, Stan Engerman, famous for his work Time on the Cross, just shared with me a short retrospective now that 40 years has passed since the publication of that book. Here are some tidbits from that work. Stan actually does get invited to dinner parties despite this, demonstrating that I have much to learn about the world still.

  • According to Frederick Douglass, what is the worst part of being a slave? It wasn’t necessarily the deprivation and physical treatment but rather, “it was the loss of freedom of action that was the primary evil of enslavement.” Gee, I’d like to see that sentiment more widely appreciated when it comes to all institutions.
  • Slavery has obviously existed in many societies, in many times, from ancient societies into the 20th century, in the Americas, Europe, Asia and Africa. … The U.S. South was not the first British or European New World settlements to have slavery, nor was it the last area to end it (that was Brazil in 1888).
  • “The interest in the slave trade has also shown us more about the nature of slavery and the slave trade in Africa — and the role of wars, kidnapping, and other means of acquiring slaves within Africa, with the sending of slaves to the coast by Africans for sale to Europeans, or else northward to North Africa or the Middle East, eastward to the Indian Ocean areas, and also the large number traded with elsewhere in Africa. African traders gained from the rising slave prices due to the increase demands from these sources. Slavery played a significant role in Africa before, during, and after the transatlantic trade. Slavery was generally ended by European colonizers, since there was a limited indigenous African anti-slavery movement.
  • In regard to economics and demography, views have shifted from seeing slavery as the cause of a backward and a declining economy to now describe slavery as a system that was often booming economically and quite productive.
  • Brazil was the largest recipient of African slaves, over 40% of the total … the U.S. received only about 5% of the transatlantic slave trade. Yet the US had more than 1/3 of all New World Blacks in 1830. This growth reflected a very high rate of natural increase, based on unusually high level of fertility and relatively lower mortality than for slaves elsewhere … it was the high southern slave fertility — as high as that of northern and southern whites at the time…
  • This might mean that the slave trade and slavery had then become relatively inexpensive to give up. Or, as Adam Smith suggested concerning the Pennsylvania Quakers, the fact that they ended slavery indicated that it was unprofitable to them — that the demand for morality is downward sloping. It is easier for individuals and societies to behave morally when the costs of morality are considered low.
  • Prices, both male and female, in the U.S. rose through the 1850s, reflecting expectations that slavery would continue. The same upward price pattern in the 1850s existed for slaves elsewhere. Even late in the slave era it was clear that slavery was still profitable and planters did not expect decline to be immediate.
  • Easterlin’s findings indicated that from 1840 to 1860 the South grew about as rapidly as did the North, and although its income was below that of the Northeast it was above that of the agricultural Midwest.
  • And although it is not clear exactly what this proves, cotton became more important to the south in 1880 than it was in 1860.
  • In no major case in modern times did slavery simply grind to a halt due to unprofitability.
  • There had seemed little objection by scholars when these indicated that the North was more productive than was the South. It was only when the result seemed possibly to go in a different direction that attention was drawn to the difficulties of measurement.
  • Since planters wanted to (and dud) make money from their operations, it is possible that they were not as frequently cruel and harsh as often argued.
  • Thus, the higher fertility of U.S. slaves reflects considerations such as health, available foodstuffs in the U.S., a higher stability of cohabiting, and an adaptation away from African patterns of nursing.
  • There were also dramatic changes in southern laws, politics, and education after 1870, but then there was a sharp reversal of many conditions after 1890. Was this 1890s change in U.S. ex-slave conditions related to economic or to other factors?
  • If the current U.S. conditions are a legacy of slavery, why was it so long deferred, and on what did it depend on to take place? Also to be noted is the differential success of West Indian ex-slaves in contrast with those from the southern states when both began to move to the northern U.S. in the 20th century.
  • At times it was argued that the slaves, not the owners, should be compensated for the theft of their labor, but this argument was infrequently made, and never carried out. … In the U.S. and elsewhere there was no major calling for what came to be called reparations until the 1960s.

Goodbye Seniors

Congratulations and godspeed. I’m extremely honored to have been part of your lives and I wish for all of you the deepest human flourishing.

You will be missed but not forgotten.

Public Service Announcement: If you ever need a good belly laugh, check out the Darwin Awards.

Were there awards handed out to dingbats who do not manage to kill themselves, then these thieves from my hometown area would be in a race for the title:

If I were one of the burglars who ransacked her Build-A-Burger restaurant in Mount Morris on Sunday and was already in for her surveillance cameras and cash register, I would have made off with the big steel bowl of macaroni salad in the fridge, too.

Because if you’ve ever tasted Hill’s macaroni salad, you know you don’t wait to eat it, even if you’re lugging a 35-pound cash register and cameras through the weeds of theGenesee Valley Greenway hiking trail in the middle of the night on the lam.

the three men arrested in connection with the burglary left “a steady trail of macaroni salad” on the Greenway that helped lead investigators to them.

“It was later discovered that the suspects stole a large bowl of macaroni salad, which they took turns eating, along their escape route

No comment.

 

Keep it Classy Redux

A soon to be former student asked me to repost this, I do so with some hesitation below – it as put together 9 years ago.

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The economics blogosphere has lit up in recent weeks with economists writing up their so-called “class autobiographies.” In the ephemeral world of blogosphere discussion topics, my following attempt seems horribly belated. I present it nonetheless.

I grew up in a lower-middle class family in Woodhaven, Queens, NY – a neighborhood roughly 250 square blocks in area containing about 40,000 residents about 7 miles from downtown Manhattan (the A, C and J trains came through my neighborhood – they were elevated). Like most static classifications of people, this tells an incomplete story. I am one of 6 children, my oldest brother was born in 1966 while my youngest in 1975 (I am the 5th child, born in 1974). Much of what I grew up in was squarely lower-middle class – however, after decades of hard work, by the time I graduated from college our family had moved to the upper reaches of the middle-class. And before continuing my story, to keep things in perspective, my growing up in modest American fashion would still have me living like royalty in many developing countries.

As best as I can gather, my entire family that is my parents’ generation and older has always been working class (it’s a term I don’t like, but will employ for conventional reasons). I know little of my paternal grandfather, his having died two years before I was born following a devastating battle with (stomach) cancer by the age of 60. What I do know is that he spent his entire adult life working as a coat maker in a Manhattan garment factory. Aside from the work being monotonous, I recall stories of the suffocating heat that built up in that factory – particularly since these were the days before air conditioning became commonplace. Neither he nor my grandmother ever attended high school. I believe that they met when my grandmother was a young girl working in that same coat factory. She quit working upon her marriage to my grandfather and she raised three children in the same house that I grew up in, and which my grandfather’s father had built upon emigrating from Italy (Sicily) at the turn of the 20th century. She lived out her life in that same apartment house with my family and the only complaint I ever recall from her is that she had to share her wedding day with a cousin (double weddings were common back then). It is not clear exactly how and when my great-grandparents made it to the United States.

My dad attended the same Catholic elementary school as all of my siblings – he graduated a year early and was bright enough to land a full-tuition scholarship to Bishop Loughlin High School in Brooklyn (also alma mater of Mayor Guiliani) – to which he took the train every day from our home in Queens. An accomplished athlete, he never had the benefit of coaching or the abundance of leagues that today’s children enjoy – so he became a student of sports instead and focused on doing as well in school as possible. As a result, he was the first Rizzo to attend college – and were it not for the miniscule costs of tuition at CUNY-Queens College he may not have been able to. Wanting to avoid the grueling factory work of his father, he majored in accounting there. He married my mom at age 20 and completed college at night while starting a job as an apprentice accountant at Dun & Bradstreet. Through hard work and an amiable demeanor, he ended up being asked to learn the debt rating trade, and earned his way to senior management positions at Standard & Poors and Fitch before retiring in 2004.

My maternal grandparents each emigrated from Italy to the Bronx (and eventually made their way to Kew Gardens, Queens) when they were teenagers (Naples and Bari). The story of their emigration from Italy, too, is fraught with uncertainties. They were definitely old-school Italians. They spoke their version of Italian in the home and taught it to each of their children (all of whom also went to Catholic school). My grandmother used to get her chickens live from the butcher and take care of them herself in the backyard. Not one ounce of those chickens was ever wasted. I’m not sure either of them formally finished elementary school. Certainly, neither of them attended high school.My grandfather plied his masonry skills to a career carving gravestones (he apparently was as scary as his job was). I also never met him, as he succumbed to silicosis as a result of long-term exposure to the silica dust from his stone carvings. My grandmother never worked outside of the home as far as I knew.

My mother graduated from an all-girls Catholic high school and only worked outside the home briefly as a teenage girl (in the same coat factory that my paternal grandfather worked). She married at 18 and raised 6 children in lieu of a career. Once we were old enough to attend school, she started to cut hair out of our home to make a few extra bucks – I can still remember the awful smell that overwhelmed the house for hours when she would do a perm for some local Woodhavenite. Thank goodness she was never found out. We shared our home in Woodhaven with one of our grandmothers. My mother took care of all 8 of us in a 2 bedroom, 1 bathroom apartment.

Largely due to the work ethic instilled in us by our parents each and every one of my siblings has attended some college. One is still in college. One finished with a bachelors. Three have masters degrees and one has his doctorate. Until very recently, I was the only one to attend a residential college out of state. I never explicitly planned on leaving for college – I just wanted a place to play football and I followed the advice of my adult peers when they told me to attend Amherst – “it would be for my own good.” Somehow, my parents found a way to put me through Amherst – and while I want desperately to state publicly that it was worth every penny, I have serious reservations.

I was a physics major at Amherst and wanted to pursue a career in nuclear physics. However, struggling to get B’s in class and finding little encouragement from the program faculty I looked elsewhere for things I might be good at. On a lark I took up economics – and while I cannot say that I found it to be intellectually stimulating (at least not as interesting as trying to understand the inconsistencies between General Relativity and Quantum Mechanics), I did find it to be intellectually satisfying. No where else in my life had I come across a formalization of the idea that that there is a link between hard-work and reward. And in studying economics I found for the first time a lens through which I could analyze what I always felt was no-think activism on my campus and the attempts at social engineering that I saw failing all around me. Rather than just being able to feel that these things were follies, I was able to identify precisely why they were follies. After enduring a stint in New York City upon graduation (I went there thinking I was chasing love and money and ended up with neither) I went on to earn my PhD in Economics. It wasn’t until I started teaching however that I actually learned anything about real economics.

When I was a kid, I cannot ever remember thinking that our family was in trouble, or losing ground, or simply not wealthy. You might say it’s because my parents did an excellent job at insulating my mind from the signals that told us the opposite. But that conclusion is too simplistic. I read too much, I dreamed too much and I hoped too much to be fooled into thinking we were the next incarnation of the Rockefellers. So, I was well aware that we were not well off – however, I was utterly indifferent to that fact even as I moved into my latter teen years. What I am astonished about as I write this piece is that I can’t remember exactly when it was that my awareness of class changed or what forces were responsible for this awareness to come about … but I am sure being at Amherst had a lot to do with it.

Looking more closely at my childhood has seriously demonstrated to me what is really important in life. My most vivid memories do not include complaining about driving around in a beat-up old Buick or not having a new set of clothes to run around in, for example. Rather, my most vivid memories include playing stoop-ball with my brothers (and hoping not to hit the awning and anger my grandma), playing Ringolario with different groups of friends, riding my bike around Woodhaven like it was my pilgrimage to Sturgis, borrowing 10 books at a time from the public library and gobbling them up quickly so that I could take ten more, doing brain-teasers and filling out Mad Libs in my backyard, studying baseball history and statistics, playing basketball in 88th street park, playing stop football up at Victory field, playing wiffle ball in the street in front of my house(and hoping not to hit one into Angelo’s yard) and floor hockey in our tiny driveway (we used old couch cushions for goalie pads and set up a blanket between two chairs for a net) among other things.

We did not have a new car until my dad turned 40 (my oldest brother was 19). Why not? Because my parents refused to let their children be educated by such wonderful state institutions as P.S. 60 and Franklin K. Lane High School. That sacrifice alone was not sufficient to send us to Catholic school or to provide for our well being. My parents never tried to convince us that we were being exploited or were getting the short straw in life – they just loved us and showed us that through thrift, hard-work and perseverance good things would happen. Sure they prayed for our good fortune, but what they actually did, in addition to not buying new cars, was also refusing to buy themselves the latest, greatest stereos, or televisions, or furniture, or clothes, or extravagant vacations, or not spending money when they were on business trips, by having my mom repaint (and stucco) the house, by the kids each doing their chores, by simply not indulging in all of the things that many take for granted today. When the 8 of us finally grew out of the old Buick sedan (3 in the front and 5 in the back), dad splurged on his first new car – a swanky two toned silver Dodge Ram van – the paragon of family utility.

Did having this van embarrass us? Heck no! We simply weren’t aware that it should. So what, that van never took us to our country club. It never took us to our private tennis lessons either. It never took me to my classical guitar lessons, or took our family to the theatre, or to public lectures, or gallery hops, etc. Where that van did take us was something deeper – it took us to places as a family. We spent time at the beach. We went to each other’s sporting events. We visited family. We made weekend trips to Upstate, NY. All together. And all totally ignorant of where that van was not taking us.

So, what did it really mean to be among the lower middle class in America? It meant that if we went out on a Friday it was a shared McDonald’s dinner rather than a shared porterhouse from Ruth’s Chris; it mean upper deck tickets to a Mets Game; it meant shagging flies with my dad at Pals Oval; it means splitting a bucket of golf balls with my brother and father at the Douglaston Driving Range; it meant not meeting anyone famous; it meant we did not run with “a crowd.” What it did mean is that we focused on the simple things we needed to do to be happy and to be prepared for our uncertain futures. What it does mean is that with loving, dedicated parents, each of my siblings had the opportunity to be successful. What it does mean is that even a relative lack of material resources is no obstacle in a free and affluent country like America. We accepted no hand-outs (or hand-ups or whatever euphemism you want to call them). We sought no protection. We did not lobby or march in support of, or against some cause. We did not look to blame our condition on someone else. We did not alter the rules of the game to work in our favor. We stepped on no one and hopefully treated everyone we met with respect and kindness. We did not steal, cheat or lie. It is through these (lack of) actions that my parents have taught me to respect persons, property and ideas – even when they were not aware that these lessons were being taught.

And what would have become of me had I grown up rich? It’s obviously an unobservable counterfactual. I used to think to myself that “if I only had what Person Y had, I would be a world class insert skill or profession here …” or that at the very least I would have something that would set me apart from the billions of other people in this world. My reasoning being that I would not have had to be bored in school for 12 years while my brain slowly rotted from the slow pace of my education. Yet this thinking neatly sidesteps a couple of important facts. First, it’s not my background that has held me back from many of my auspicious dreams, it is my talent. Second, even with limited talent, this thinking underestimates the importance of lots of the little things in life that can’t be quantified or even measured – creativity, vision, alacrity, foresight, patience, honesty, to name just a few – that good relationships can nourish and that are easy to forget about if one becomes overly concerned with material resources. People always congratulate me for having received a PhD in Economics and to have gotten where I have based on where I came from. I feel like a fraud – and that feeling is derived from too much focusing on one and not enough on two.

Analyze class all you want. After doing this writing I am more convinced than ever that exercises like this are no different than exercises that try to determine why poor countries are poor. There simply is no one answer, and no one way to solve these sorts of problems. Sure resources are important, but so too are a myriad of other factors. And as Hayek smartly pointed out in many of his writings, there is simply too much information out there for any one person or group of people to understand, aggregate and appreciate. Finally, back to a point I reference above – I was not aware of my class situation until somehow I was made to be aware of it. Obsessing on class is unhealthy because it obscures how far we have come as a society since the dawn of the industrial revoluition and it totally ignores the dynamic nature of our society. Even if I were to grant you that today’s lower class people are likely to give birth to tomorrow’s lower class people, as we’ve come to understand class – it is a relative matter and therefore has little absolute significance unless interest groups force it to have some.

I promised myself this year that I would not comment on what the kids at Vox are up to. I found this one particularly interesting:

The arguments that convinced a libertarian to support aggressive action on climate

Now, the arguments themselves are very reasonable and the position that this libertarian takes seem reasonable enough to many people. The point, rather, well, there are many. Here are a couple. The title says “aggressive action.” If you asked many people what “aggressive action” means, particularly many of the fans of Vox, would they imagine that aggressive action includes, “the removal of other climate regulations, notably EPA carbon rules and state renewable energy mandates?” Would they think that ending CAFE standards and ending green building standards and subsidies for biofuels and subsidies for solar panels and so on constitute “aggressive” action on climate? Well, I will be the FIRST libertarian to have been on record saying he supports very strong carbon taxes in exchange for ending all direct regulation of energy and climate and all subsidies thereof. In addition, when a Voxer thinks, “aggressive action on climate change” and they favor taxes on pollution, do you think they have a sense for how large a tax we are talking?

A decent rule of thumb, based on how much carbon is released in the combustion of common motor fuels, is that every dollar of damage the IPCC thinks a ton of CO2 causes, that the socially optimal gasoline tax (that’s actually not the right tax, but we’ll leave that for another post) would increase by 1 cent per gallon. The mid-range estimate for damages from the most recent IPCC report, which is massively uncertain (actually that’s unfair, it’s not uncertain, it’s almost entirely assumption driven) are on the order of $30 per ton. Let’s double it for the sake of being “aggressive” or perhaps even triple it. How many Voxers think the world would change if the price of gasoline were increased by 30 cents per gallon? 60 cents? 90 cents? Remember, the price of gas just a year ago was pushing $4.00 per gallon. It’s $2.80 by me now.

The other point is that the Voxers per usual have this “Oh My Gosh, we found a formerly dogmatic libertarian who changed his mind, and this is why OUR SIDE is right!” attitude in their writing. If I excerpted stuff from the last 10 days you wouldn’t believe it. I am sure President Obama is going to be coming forth soon with a speech on how polarizing news sources like Vox are. But they dedicate two days of a story on one guy that many libertarians couldn’t even name. ONE libertarian changes his mind and wants “aggressive” action on climate and it’s news? 1 out of how many? Are there more? Look, again, there are good reasons to switch your mind on this issue, that is not what is at issue here, the newsorthiness of it, or the information content embedded in the switch is.

Is Vox going to run articles about climate scientists who no longer support aggressive action on climate? Or of libertarians such as myself who once used to support aggressive action on climate but no longer do? Hey, look, I just found one, and he’s more well known than me, or perhaps even the CEO of the Niskanen Center: Ken Green, who we once had out at our old firm’s conference on climate change. Here he demonstrates exactly the opposite as the Vox piece did. So that’s one prominent “freedom lover” who changed his mind in a pro-Vox fashion and another who changed it away.

If the Voxers wish to convince me that “we” need to take aggressive action on climate change, they will first have to stop doing things like this. My default position is to not trust ANYONE on issues of policy, particularly climate. There would have to be a lot that changes to convince me to believe many people. More on that in a future post.

 

GMOs

  1. Virtually every sweet potato ever eaten from cultivated crops, for thousands of years, naturally and organically produced, is transgenic (i.e. a GMO). It’s just that the hand of man did not do the modifying, rather the hand of Gaia/God/you_name_it.
  2. Citrus greening is caused by an invasive bacteria from Asia and is decimating American citrus production. Now, GMO techniques have a good chance of saving the day. Kudos to the EPA in making an “exception” to fast track the use of these two proteins from spinach.

The NY Tiimes today reports on a new “study” of chemical contamination due to gas drilling in Bradford, PA (not too far from us here in Rochester):

An analysis of drinking water sampled from three homes in Bradford County, Pa., revealed traces of a compound commonly found in Marcellus Shale drilling fluids, according to a study published on Monday.

The paper, published in the Proceedings of the National Academy of Sciences, addresses a longstanding question about potential risks to underground drinking water from the drilling technique known as hydraulic fracturing, or fracking.

OK, so we test the water from three hones. And the tests indicate that there is a chemical called 2-Butoxyethanol in the water well of one of the homes. The study’s lead author tells us that this is the first case of contamination with a complete story that plausibly connects the drilling process to water contamination. What is striking is not at all that researchers, who have obviously been very hard at work trying to figure out if fracking is safe, have found a contamination, it is that so little contamination is actually documented. This site claims that there are over 1.1 million oil and gas wells in the United States right now. Not all of these wells have been fracked, but it appears a large proportion of them have been. No, what is striking is that so little contamination has been found and reported. With so many years of operation and so many hundreds of thousands of wells fracked with hundreds of millions of gallons of fluids used in the process, this is the first major finding of contamination that can be linked to the fracking process? I do not doubt for a minute that the sparse findings are due to a lack of trying. Were I trying to be a good economist at the moment and not care about the vitriolic emails and threats to pollute my own drinking water, I’d suggest that it is almost surely the case that we are not polluting enough water from fracking at the moment. But I am not trying to be a good economist, so I don’t particularly care to make the point that if so little water is being contaminated, then it may be the case that far too many resources are being devoted to well safety, which means that not only is the price of gas higher than it “needs” to be, but that resources being devoted to well protection could very usefully be deployed to provide protection from something other than wells. In other words, while you might think that one polluted well is one too many, it seems to be the case that our water is probably dirtier than it needs to be because we are so concerned with fracking safety and in fact that people’s health and well-being are worse today because the higher gas prices and additional resources dedicated to fracking safety are either encouraging some people at the margin to use less healthy fuel sources, go with colder winter temperatures in their homes, and have less safety and health purchased elsewhere in the economy. Of course, I am not actually making that point, I am merely suggesting that someone who knows something about environmental economics might be inclined to suggest it.

The article goes on to say this:

In 2012, a team of environmental scientists collected drinking water samples from the households’ outdoor spigots. An analysis showed that the water in one household contained 2-Butoxyethanol or 2BE, a common drilling chemical. The chemical, which is also commonly used in paint and cosmetics, is known to have caused tumors in rodents, though scientists have not determined if those carcinogenic properties translate to humans.

I’m supposed to play nice in this sandbox, even though it is mine. But this sort of reporting is common, misleading, and borderline fraudulent. Did you know that every single thing you are exposed to, look at, breathe, eat, stick on your face, wear on your body, clean yourself, clean your child, etc. with is a chemical. That’s right folks, everything is a chemical. And every chemical has a scientific name. Here’s possibly an analogy: Sialia has been found near one home and it threatens the insect population that is so vital to frogs, carp, lizards, bats, and spiders which are crucial to maintaining a healthy ecosystem balance. And not only is the invocation of it’s a chemical !!! disingenuous, but so too is the next play from the playbook of alarmist, showing that this really bad chemical is used in some things you probably would not want to eat or drink like paint and cosmetics. Well, it turns out that they make non-toxic paint and it seems they make non-toxic make-up too. So, are we reporting on a major research “study” that finds something non-toxic in the water? Oh, no, it can’t be that, the author must mean something bad, like some of the chemicals that are in paint. But if that is the case, then why not say so? You know many paints include clay and calcium carbonate as extenders. Did you ever freak out if a little clay was ingested? Or how about calcium carbonate? That’s what eggshells are made of and indeed some people take the stuff for calcium supplements. Oh, the horror! It’s in paint! Or how about the prime ingredient in latex paint: water? Well, it’s true that water can kill you, so maybe that’s what the author mean?

No, we know they meant, “some nasty stuff.” Well, as people smarter than me have indicated, toxicity is all about the dose. Vinyls acrylic is found in paint, and drinking a cupful of that stuff is probably not going to keep you alive for a long time. So, to give the benefit of the doubt, maybe this 2BE is some really nasty stuff. After all, it has been known to cause tumors in rodents. And you know that cabbage seems to cause tumors in small rodents too (note that paper’s cool findings on selenium, the toxic stuff that caused a problem in the Central Valley two decades ago). So, are we told how awful this chemical is? Sort of, at the end of the 5th paragraph of the story is this:

The authors said the amount found, which was measured in parts per trillion, was within safety regulations and did not pose a health risk.

So, a major study finds for the first time that something in a water well that can be attributed to fracking, and that something is “within” safety regulations in concentrations of parts per trillion. They never tell us what the safe exposures are and how much lower the paper finds them to be. But I doubt for a minute that the headline writers at the NYT (or anyplace really) were ever planning on writing as a headline, “Water Wells in Bradford, PA Fracking Territory Surprisingly Safe,” or something to that effect.

Again, none of this is to say that fracking companies are doing all the right things, or that gas hasn’t been released into nearby wells. How about this doozy near the end:

An environmental scientist from Stanford University, Rob Jackson, who also reviewed the paper, said it “clearly shows an impact of oil and gas drilling on water quality.” But he emphasized that this instance was an exception.

I don’t quite know what to say. My suspicion is that in response to my piece here, someone who thinks I am evil would suggest that, “well, sure, this is not really any evidence of damage and it is only a rare well that seems to have evidence of contamination, but now we know it’s possible for something bad to get from drilling sites to people’s water,” and then the typical discussions of precaution and safety and regulations follow.

Can fracking companies make safer wells? Sure. Do they know how to? I am pretty sure they do. Would I want dirty things ending up in my water? No. But none of this is relevant to the right question which is, “how much water pollution do we want to see?” And no folks, the answer cannot be zero.

I highly recommend almost anything written by George Stigler. Don B. posted this quote the other day:

… is from page 14 of George Stigler‘s entertaining 1988 autobiography, Memoirs of An Unregulated Economist:

A large number of successful businessmen have gone on to high administrative posts in the national government, and many – I think most – have been less than distinguished successes in that new environment.  They are surrounded and overpowered by informed and entrenched subordinates, they must deal with legislators who can be relentless in their demands, and almost everything in their agency that should be changed is untouchable.

At the risk of sounding overly preachy, if I were to have my students take one piece of life advice from me as they are about to embark upon their real lives, it is that they, at some point in their lives, engage in a profit seeking activity in a profit seeking way, along with all of the accoutrements. This can of course mean just working somewhere in the for-profit sector, but even better it would involve you trying to find, motivate and manage a staff of people, meet the payroll, source your inputs, and meet deadlines for clients. While it is certainly possible to run a non-profit like a business, the incentives at work in that sector are just so far removed from what they are in the competitive for-profit sector where constant feedback, adjustment, and adaptation are the norm.

And while Stigler’s point above was made about the government and its bureaucracy, the very same point can be applied to almost any non-profit. I have worked full time for a few different ones, and volunteer a great deal of time at another, and should you be inclined to see opportunity for improvement, streamlining, and so on, you might as well stick it in a can and toss it to the bottom of the sea. You will be seen as “too inexperienced,” idealistic, pushy, etc. And why not? When there are not profits at the bottom line and instead the satisfaction of a creeping and sprawling “mission” instead, there are few objective criteria that folks can agree upon as a common denominator for evaluating changes and operational successes and failures. You do not want to be labeled as non-collegial, non-loyal, and so on. Should you end up at a non-profit because you are drawn to its ideology and mission, and you see a need for change, go start your own. Or figure out a way that the mission can be met in a profit-seeking way.

On a related note, I think all non-profits should be abolished. I also believe, deeply, that more social good can and will (and has been) be done by you engaging in profit-seeking businesses in profit-seeking ways. Another of the great failings of economists and indeed the modern university system is in not forcefully enough demonstrating this point. The starting point should be to recognize the good, and to look for ways to improve it when it “needs” improving. Again we are not saying that profit seeking activities can and do operate in a cultural or institutional vacuum, but if you were to list 10 historical “things” that have made the world better for the masses of people, or 10 future “things” that can make the world better, you would be hard-pressed to find the work of a non-profit lurking in the explanatory shadows. Much of the work at a non-profit is not merely mission driven, but consumption driven. The boards of directors and employees of the non-profits are really the stakeholders and the organizations are run to their satisfaction, not (merely) the satisfaction of their customers or clients. There is nothing at all wrong with this by the way, it would nonetheless be nice if this were more socially understood.

In yesterday’s news, our university announced the creation of another new institute/initiative, the Institute for Performing Arts. Note that one of the students depicted there is one of my very best students! So this institute seems like a really great idea. I am wondering how many initiatives and institutes our university has shut down over the years? With the addition of a new institute comes the need for more oversight, supervision, brainpower and inevitably campus space and finances. We understand that campus resources are not unlimited. So is the university making assessments at the margin that the addition of director level staff and hours of work on this new institute are more important than something else we are doing? What is that something else? Does that something else ever/often come under evaluation? Would our university announce the closure of a major initiative or institute?

The incentives for universities are to add, add, add, much in the same way that Department of the Interior administrators have an incentive to add new items to their to do lists and facilities list. The new is catchy, interesting, newsworthy, glamorous. It’s always easy to make the case that “we should” do more of something. It’s far harder to direct resources to maintaining the things we do or even making tradeoffs among the things we do. Hence the National Park System is perpetually in the news for being years behind on its maintenance and with facilities across the country underfunded and crumbling. Ignore the many other reasons for this and possible solutions, but it is simply the case that it is far easier to get support for the construction of a new visitor center, or a new restroom, or new educational initiative, than it is to get support for rebuilding water and sewer systems in 100 year old parks.

In the park service, this “newness fascination” manifests itself with chronically underfunded parks and massive deferred maintenance. In universities the very same thing leads to higher tuition and mission creep. Different symptoms, same cause. To be fair, maybe my university does actually shut down departments and institutes but they just don’t want to draw attention to them, in which case my comments here are to be taken with a grain of salt.

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