Friday, 2 August 2019

Economics of climate: Step back from ideology

What is economics, in essence?

It is an optimization problem. You choose your measure of interest and make it as good as possible.

From there, opinions vary. What is your measure of interest? Some say growth – the rising tides raise all boats crew (they have never had a leaky boat). Others say equity – inequality they say is not an acceptable price for growth. Sustainability is another measure: it is all very well to pursue maximum growth, minizing inequality, maximizing access to quality health and education or whatever other goal you seek if, in the long run, everything falls apart.

The optimization problem and the hazard of local maxima.
Assume your score of interest is good if it is big. At points
A and B, getting better takes you to a place that is not the best
because you have to first pass through a point where things
look worse


There are two difficulties with simplistic markets-vs-socialism comparisons. First, not everything is an economic good. A social good may not have a monetary value and also may not be promoted by pure economic growth. Another problem is that a market is good at finding local maxima, and disadvantages players willing to endure short-term pain to reach a more optimum point.

Markets favour local optimization

Check out the picture.

Assume you are in an industry where players have achieved efficiencies that put them at point A or B. If they are under competition pressure, their best strategy is to move to the “local maximum” because moving in that direction makes them more competitive. If they attempt to move to the point marked “best?” they first have to move through a stage of getting worse.

This is in very generic terms – to make it concrete, if a totally new way of operating is proposed that is way more efficient than traditional practice but it takes a big investment to implement, anyone adopting the new concept goes through a period where they incur extra costs in making this investment. They therefore move away from the local maximum and head down the “worse” slope. Then, once the new investment starts to pay off, they need to make improvements to get ahead of the competition who is still playing in the “local maximum” space.

Social vs. Economic Foods

Some things either do not have a monetary value or are too important to leave to the possibility that the markets will fix them. One example is health. Up to a point, you can trade being healthy for having more money but debilitating or life-threatening conditions are things you would rather fix the best way possible that worry about the cheapest option. More broadly, a healthy population benefits society. Essential work is not left undone because someone is sick, etc. Much the same can be said for education. Though being educated confers personal advantage, society as a whole benefits from a more educated population.

Can markets alone optimize social goods? No. Because access to resources does not neccessarily correlate with ability. The stupidly rich can benefit from education even if they have very little potential. If the extremely poor get ill, they cannot be expected to work extra time while still sick to pay medical bills.

A borderline case is negative externalities, costs that do not fall on a producer but that cost society. These are economic costs but are not well-suited to the market model as the cost can be passed on to society. Examples include pollution and depletion of natural resources.

Climate Change

Where does climate change fit into all of this?

First, the cost is a negative externality, something that the markets demonstrably do not handle as they have not fixed the problem. Second, it is a social cost as it damages the poor disproportionately and generally will damage those not responsible for the problem. Third, it illustrates the problem of local optimization neatly. While it is increasingly plausible that renewable energy in the long run will cost less than fossil fuels – particularly when cheap sources deplete – in the short term the “worse” cost scenario has to be covered somehow, otherwise renewables cannot build to the sort of scale needed.

Some fundamentalist libertarians argue that climate science is flawed because it requires a large-scale government intervention. I argue the opposite. Their economic philosophy is flawed because it cannot remedy a situation like this. So instead of allowing someone else to fix the problem, they deny.

Monday, 22 April 2019


Image may contain: food
Ladyfinger biscuits highly discounted – what are you going to do?
  • 250ml cream
  • 250g mascarpone
  • 75ml marsala
  • 5 tbsp sugar
  • 2 shots of espresso
  • 200g pack ladyfinger biscuits
  • 100g good dark chocolate
Whisk the cream, sugar, mascarpone, marsala and sugar vigorously until the mix comes together and the cream thickens.

Line a bowl with the half the biscuits and drizzle over one shot of espresso, evenly spreading over the biscuits.

Spread over half the cream mix then finely grate over this half the chocolate.

Add another layer of biscuits and finish the layering with the rest of the cream mix and chocolate.

Cover and refrigerate.

Highly modified from a BBC recipe, which in my opinion uses too much cream and substitutes regular coffee for espresso.

Monday, 17 December 2018

Strawberries and Cream Ice Cream

Finished product; ice cream maker in the

Summer – Ice Cream Time

But what to buy? The commercial stuff has suss ingredients. What’s palm oil? Scraped off workers’ palms? Here’s mine.



  • 350ml milk
  • 150ml cream
  • 3 egg yolks
  • 100ml sugar

Cold ingredients:

  • 250ml cream
  • 250g frozen strawberries


Make the custard.

Set up a double boiler (or mixing bowl over a pot of water) with the water just touching the top pot (or bowl) and add in the milk and cream. Meanwhile whisk the sugar into the egg yolk. When the milk gets hot enough to form a skin, reduce the heat to miminal and pour the hot milk onto the egg mix; stir well and put the mix back in the double boiler. Cook until it starts to thicken (slightly coats the back of a spoon). Turn off the heat, put a lid on and leave to stand until it has cooled and thickened a bit. Not right down to room temperature.

Now add the frozen strawberries and blend (I use a stick blender). This will drop the temperature. Put the mix in the freezer until it starts to form ice. In the meantime whip the remaining cream and keep it well chilled. Add to the rest of the mix and churn in an ice cream maker. I use a hand-operated one and chilling well in advance is essential for best results.

If you don’t have an ice cream maker, take he mix out of the freezer after an hour and break up icicles; you will need to keep on doing this until it has set.

Monday, 8 October 2018

Liberation from Trump

I liked my Quora answer (see link on the question) so here it is again…

A way to look at it is to start from the distinction between lying and bullshitting.

Lying: construct a consistent narrative that distorts or replaces facts with falsehoods. A liar is vulnerable to fact checking. Kavanaugh is a case in point. There is evidence that he actively covered up some of the facts that work against him; he desperately needed the FBI investigation to be limited in scope.

Bullshitting: saying whatever it takes to get you through the moment. Even if you contradict yourself. A bullshitter is much more immune to fact checking because anyone who supports them has already repeatedly had to get past the point of accepting that they are lying. That is Trump.

Had a significant part of Kavanaugh’s story been falsified, he would have been done. Trump, by lying in small increments, has inoculated himself against exposure of bigger lies.

The psychology of it is that of the long con. Suck someone into believing something small that is improbable. They now have to admit being fooled to back out; if they are not up for that, suck them into believing something bigger that is unlikely to be true. Take it in small steps so they cannot back out when they are forced to believe something really totally improbable. To do so, they have to admit they have been fooled by all the previous steps.

And no one wants to admit to being a fool. However, everyone who has gone down this path actually knows they are a fool even if they won’t admit it. In the UK, only 5% of scams are actually reported. Sexual violence has even worse stats; broadly speaking sociopaths win when society enables them by allowing victims to feel embarrassed.

If you are a Trump True Believer and you suddenly hit the Emperor’s New Clothes moment, embrace it. You are now free. Do not be embarrassed – there is a whole world out there waiting for your liberation and happy for you if you get there.