Author: Hafiz Noor Shams

For more about me, please read this.

Categories
Economics Environment Politics & government

[939] Of climate change and global warming are market failures

From time to time, somebody will point it out to me that libertarianism and environmentalism have opposing ideas in them. Perhaps.

I however manage to merge the two philosophies together because I understand market failure (as well as externality). The concept of market failure is what many libertarians refuse to accept despite the economics behind it. I’d be damned if I ignore market failure and call myself a graduate of economics. I reached to this conclusion when I first encountered tragedy of the commons as an economics undergraduate.

I’m a classical liberal in the sense that I’ll accept market solutions as superior to government solutions as long as market failures are absent, in most cases.

A few days ago, British economist Nicholas Stern published the Stern Review on the Economics of Climate Change:

The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.

This independent Review was commissioned by the Chancellor of the Exchequer, reporting to both the Chancellor and to the Prime Minister, as a contribution to assessing the evidence and building understanding of the economics of climate change.

The Review first examines the evidence on the economic impacts of climate change itself, and explores the economics of stabilising greenhouse gases in the atmosphere. The second half of the Review considers the complex policy challenges involved in managing the transition to a low-carbon economy and in ensuring that societies can adapt to the consequences of climate change that can no longer be avoided.

The Review takes an international perspective. Climate change is global in its causes and consequences, and international collective action will be critical in driving an effective, efficient and equitable response on the scale required. This response will require deeper international co-operation in many areas – most notably in creating price signals and markets for carbon, spurring technology research, development and deployment, and promoting adaptation, particularly for developing countries.

Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen. The economic analysis must therefore be global, deal with long time horizons, have the economics of risk and uncertainty at centre stage, and examine the possibility of major, non-marginal change. To meet these requirements, the Review draws on ideas and techniques from most of the important areas of economics, including many recent advance, including many recent advances.

Climate change and global warming induced by human are forms of market failure and externality, as with many other environmental problems.

Categories
Education Politics & government

[938] Of University of Michigan is Michigan’s midterm election issue

Whether we like it or not, the affirmative action rulings that brought the University of Michigan to national political limelight not too long ago refuse to die. This time, the issue appears on the ballot in form of Proposition 2:

ANN ARBOR, Mich., Oct. 25 — Three years after the Supreme Court heard Jennifer Gratz’s challenge to the University of Michigan’s affirmative action policy, she is still fighting racial preferences, this time in a Michigan ballot initiative.

Leaflets at the University of Michigan in Ann Arbor urging voters to oppose the ballot initiative.

“We have a horrible history when it comes to race in this country,” said Ms. Gratz, 29, a white applicant who was wait-listed 11 years ago at the state’s flagship campus here. “But that doesn’t make it right to give preference to the son of a black doctor at the expense of a poor student whose parents didn’t go to college.”

The ballot initiative, Proposition 2, which would amend Michigan’s Constitution to bar public institutions from considering race or sex in public education, employment or contracting, has drawn wide opposition from the state’s civic establishment, including business and labor, the Democratic governor and her Republican challenger. But polls show voters are split, with significant numbers undecided or refusing to say where they stand.

Passage would probably reinvigorate challenges to a variety of affirmative action programs in other states. In California, where a similar proposition passed in 1996, the number of black students at the elite public universities has dropped. This fall, 96 of 4,800 freshmen at the University of California, Los Angeles — 2 percent — are black, a 30-year low.

For the University of Michigan, the proposition would require broader changes than the Supreme Court did; it ruled in Ms. Gratz’s case and a companion case that while the consideration of race as part of the law school’s admissions policy was constitutional, a formula giving extra points to minority undergraduate applicants was not.

This issue seems to unite a lot of traditional foes together:

Opposition to the measure is led by One United Michigan, an unusually broad coalition that includes Gov. Jennifer M. Granholm, a Democrat, and her Republican challenger, Dick DeVos, as well as unions, churches, businesses and higher education and civil rights groups. It has raised and spent $3.3 million.

“We have the A.C.L.U. sitting with the Michigan Catholic Conference on the steering committee, which is something you don’t see very often,” said David Waymire, a coalition spokesman. “There isn’t a big Michigan voice on the other side. But it’s tough. Two years ago, the initial polling found more than two-thirds supported the proposition. The miracle is that we’ve gotten it into a winnable range.”

For those unfamiliar with the issue, University of Michigan, my alma mater, was center of debate on affirmative action. Even President Bush commented on the case, as mentioned in an entry (while reading the past entry, please note that I haven’t cemented by opinion on affirmative action in Malaysia at that time. In fact, read this too, where I was trying to take a pragmatic view). From the look of it, Michigan is still the center of debate.

The last time the battle was fought, the result was a draw at best. Wikipedia has a write up on the issue at Grutter v. Bollinger and Gratz v. Bollinger. Bollinger was the President of the University. He’s currently the President of Columbia University. While at Michigan, he was very popular with the students.

Categories
Liberty

[937] Of disband the moral police and strengthen democratic institutions instead

Remember the disgraceful thugs?

Well, the moral police department spokesperson said that the harassment on the American couple was done according to procedures:

ALOR STAR: Religious enforcement officers followed procedures when conducting a khalwat (close proximity) raid at the condominium in Langkawi rented by an American couple.

This shows that the case is systematic in nature, not isolated. So, all the more reason to get rid of it. We better disband it quickly before it hurts our economy further.

All those resources used to support the moral police department should be diverted to effort to build lasting democratic institutions. Like the reinstatement of local elections for instance. The reinstatement of local elections is one of the best ways to prevent councilors and representatives like Zakaria Md Deros from abusing power granted to them.

Categories
Economics Humor Liberty

[936] Of The Onion on North Korean nuclear test

I haven’t shared anything about the recent North Korean nuclear test. So, what do I think of the test?

Well, I’ll let The Onion does the talking for me (via):

PYONGYANG, NORTH KOREA—A press release issued by the state-run Korean Central News Agency Monday confirmed that the Oct. 9 underground nuclear test in North Korea’s Yanggang province successfully exploded the communist nation’s total gross domestic product for the past four decades.

Long live communism…

Categories
Economics Liberty Politics & government

[935] Of Greg Mankiw is a libertarian!

I first became familiar with Professor Gregory Mankiw while I was at Michigan. I and many other economist wannabe at Michigan used his book during our macroeconomics classes. He of course became publicly prominent when he served the Council of Economic Advisers. He became more prominent (well, infamous really but that depends on your point of view; really, the point of view of most Americans at that time was increasingly protectionist) when he expressed support for outsourcing. In Friedman’s The World is Flat:

During the 2004 election campaign we saw the Democrats debating whether NAFTA was a good idea and the Bush White House putting duct tape over the mouth of N. Gregory Mankiw, the chairman of the White House Council of Economic Advisers, and stashing him away in Dick Cheney’s basement, because Mankiw, author of a popular college economics textbook, had dared to speak approvingly of outsourcing as just the “latest manifestation of the gains from trade that economists have talked about at least since Adam Smith.”

Mankiw’s statement triggered a competition for who could say the most ridiculous thing in response. The winner was speaker of the house Dennis Hastert, who said that Mankiw’s “theory fails a basic test of real economics.” And what test was that, Dennis? Poor Mankiw was barely heard from again.

Also, the Big Mac controversy.

When I first found out that Prof. Mankiw blogs, I became his regular reader.

Last Friday, I asked him are you a libertarian. The next day, he answered yes.

Sweet.