Economists’ Statement on How to Fight Climate Change

Related image

This is an impressive statement. It features 3333 economists, 4 former chairs of the Federal Reserve, 27 Nobel laureates, 15 former chairs of the Council of Economic Advisers, and 2 former Secretaries of the U.S. Treasury Department.

Their recommendations:

I.  A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.

II.  A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.

III.  A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long- term investment in clean-energy alternatives.

IV.  To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.

V.   To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices.

Stuff I Say at School Series

Image result for hermione granger gif raising hand

In January 2019, I started my MA program in Government at John Hopkins University. With homework taking up a more significant amount of my time, my blog-related research is certainly going to suffer. Instead of admitting defeat, I’ve decided to share excerpts from various assignments in this series. I was inspired by the Twitter feed “Sh*t My Dad Says.” While “Sh*t I Say at School” is a funnier title, I’ll go the less vulgar route and name it “Stuff I Say at School.” Some of this material will be familiar to DR readers, but presenting it in a new context will hopefully keep it fresh.

Below you’ll find links to all posts in the series.

Are the Rich Getting Richer and the Poor Getting Poorer?

With yet another Oxfam report out, Swedish author Johan Norberg felt the obligation to point out its deficiencies:

There are two rules to stick to when someone reports that the rich are getting richer and the poor poorer. The first is to check the source. The second is that if the track shows that the information comes from OXFAM, you can throw it in the trash. Few organizations have such a consistent habit of misleading about the world’s prosperity.

The fact is that poverty is decreasing dramatically regardless of the degree of poverty that is used. According to the UN and World Bank’s measures of extreme poverty, it has fallen from 18.1 to 8.6% between 2008 and 2018. It is the biggest economic lift in history.

So how can Oxfam get it to the poor become poorer? Firstly, they ignore the income and consumption, and count only financial assets, which the poor rarely have – often they do not even have a bank account. And although some have it, there will not be much left in total when you deduct all the debts they have from this amount.

It enables OXFAM every year to shock journalists by saying that a single billionaire owns more than two billion people together. The problem with the reasoning is just that my daughter – who owns about 500 kronor – owns more than two billion people together, because these two billions do not have any net financial assets at all.

Or, as he said on Twitter a couple years ago:

Norberg then cites some recent research on global earnings inequality. The researchers explain,

We focus exclusively on labour earnings, which is the main income source for the vast majority of the world’s population (Hammar and Waldenström 2017). We create the first estimates of global earnings inequality, its trend between 1970 and 2015, and some evidence on its main drivers.

The estimation of the global earnings inequality rests on a unique earnings survey database run by UBS, a Swiss bank. It contains data on earnings, taxes, working hours, and local prices for workers in 15 representative occupations. The data have been collected in the same way every third year since 1970, in up to 85 cities in 66 countries, in all the world’s continents. We match it with occupational and country population data from the ILO and the World Bank. Our balanced sample covers more than 80% of the global population, and correlates well with statistics from other sources. It should be noted that the tails of the distribution are not well covered in our data, but imputations from other sources (top incomes from the World Wealth and Income Database, for example) suggest only a modest impact on the global earnings inequality trend.

Figure 1 [below] shows the main result – that global earnings inequality was very high in 1970 (with a Gini coefficient of around 70), but has fallen to a lower level today (around 60). The main equalisation occurred in the late 1990s and 2000s. Global pre-tax inequality is higher than global post-tax inequality (approximately 3 Gini points), and inequality is higher for hourly wages than for yearly earnings (approximately 1 percentage point). The latter suggests a negative relationship between earnings and hours worked at the global level. Compared with earlier studies on global inequality in income or consumption, we find that inequality in earnings and wages is slightly lower, but follows a similar trend.

Figure 1

They continue,

Decomposing the global earnings inequality trend within and between countries, we find that within-country inequality rose over this period (by 5 Gini points), while between-country inequality fell (by 15 points), leading to the combined effect of a 10-point fall in total earnings inequality. In Figure 3, we can also see that the main shift in both of these trends took place at almost the same time, during the early years of the 21st century. We also find that inequality within occupations has fallen, especially within the traded, industrial sector. This suggests that globalisation could be a potential driver of this earnings convergence trend.

They conclude,

Our new evidence on global earnings and wage inequality shows a falling trend over the past half-century. Similar to previous findings for global household income inequality, the main equalisation period was the late 1990s and 2000s. At this time several large, developing economies experienced high growth rates. Higher earnings in the agricultural sector, but also some low-skill urban professions, contributed specifically to this trend.

Once again, things are getting better.

The Big Push Falls Short

I just started my first semester at John Hopkins this week and one of my classes is “Economic Growth: The Politics of Development in Asia, Africa and Beyond.” I was happy to see that I owned a few of the books on the “Recommended Reading” list and that virtually all of the authors I had read quite a bit from. As I reviewed the list of authors and resource, I was reminded of this blog post by economist Alex Tabbarok on Jeff Sachs’ plans for African development. Sachs believed that Africa needed a “big push” in public investment to escape the “poverty trap” and spur growth. This led to the Millennium Village Project in 2005. Tabarrok explains,

The initial MVP evaluation claimed great success but simply compared some development indicators before and after in the treated villages without comparing to trends elsewhere. In 2010 such a study was completely out of step with contemporary practices in impact evaluation. Red flag! Clemens and Demombynes showed that comparing to trends elsewhere significantly moderated the impact. A second MVP paper was published in the Lancet but then was quickly retracted when Bump, Clemens, Demombynes and Haddaddemonstrated that it had  significant errors. Clemens and Demombynes wrote a summary piece on the controversy then in an astounding and under-reported scandal the MVP tried to stifle Clemens and Demombynes. The MVP, with Jeff Sachs at the head, also sicced their lawyers on Nina Munk and her book, The Idealist: Jeffrey Sachs and the Quest to End Poverty. More red flags.

Yet, despite all of this controversy and bad behavior, the MVP project continued to move ahead and in 2012, the UK Department for International Development (DFID) funded US $11 million into an MVP in Northern Ghana that ran until December 2016. Under the auspices of the DFID, we now finally have the first in-depth, independent evaluation of one MVP project and it doesn’t look great.

While Sachs and crew saw the outcome in a rosier light, the DFID’s evaluation put it bluntly:

Overall, the MVP in northern Ghana did not achieve the overall MDG target to reduce extreme poverty and hunger at the local level. Where there are attributable changes to the MDG targets, these tended to be the more limited changes than those that will fundamentally improve people’s health, educational and other outcomes. For instance, the project did increase attendance at primary school (Goal 2) but did not go beyond this MDG and improve the learning outcomes of children; the project did increase the proportion of births attended by professionals and women said to be using contraceptive methods (MDG indicators), but it is not possible to assess the effect on maternal health (Goal 5); and the project did increase the number of toilets (a target under Goal 7), but not beyond this MDG in terms of hygiene and sanitation practices. There are, however, exceptions. The project
had a remarkable impact on stunting, which is a long-term health indicator and a predictor of socioeconomic outcomes in adulthood (pg. 162).

Projects like these may have some positive results, but they ultimately look like more Western hubris

A Tale of Two WaPo articles

In the first article, Nathan Phillips was getting ready to leave and trying to remove himself from what seemed like an escalating situation, but the teens swarmed around him and wouldn’t allow him to retreat.

‘It was getting ugly’: Native American drummer speaks on his encounter with MAGA-hat-wearing teens

Phillips, 64, said he felt threatened by the teens and that they swarmed around him as he and other activists were wrapping up the march and preparing to leave.

Phillips, who was singing the American Indian Movement song that serves as a ceremony to send the spirits home, said he noticed tensions beginning to escalate when the teens and other apparent participants from the nearby March for Life rally began taunting the dispersing indigenous crowd.

A few people in the March for Life crowd began to chant, “Build that wall, build that wall,” he said.

“It was getting ugly, and I was thinking: ‘I’ve got to find myself an exit out of this situation and finish my song at the Lincoln Memorial,’ ” Phillips recalled. “I started going that way, and that guy in the hat stood in my way, and we were at an impasse. He just blocked my way and wouldn’t allow me to retreat.”

In the second article, Phillips was concerned about escalating tensions between the teens and the black Hebrew Israelites, so he decided to walk into the mass of teens while playing his drum and singing a song. The teenage boy he stood face-to-face with (now identified as Nick Sandmann) was not refusing to let him pass, but Phillips didn’t see why he should walk around Sandmann because he was thinking of what white people have done in this country over the last several centuries.

A tribal elder and a high school junior stood face to face, and the world reacted

Phillips played a prayer song on a drum as he walked toward the students.

Some of the students began doing a “Tomahawk chop” and dancing, the video shows. Phillips said he found it offensive, but kept walking and drumming.

Most of the students moved out of his way, the video shows. But Sandmann stayed still.

Asked why he felt the need to walk into the group of students, Phillips said he was trying to reach the top of the memorial, where friends were standing. But Phillips also said he saw more than a teenage boy in front of him. He saw a long history of white oppression of Native Americans.

“Why should I go around him?” he asked. “I’m just thinking of 500 years of genocide in this country, what your people have done. You don’t even see me as a human being.”

The lengthy videos show Phillips walked into the crowd and up to Sandmann, who never approached or moved to block Phillips, said anything to Phillips, or stopped him from going anywhere. And despite Phillips describing the teens as “beasts” going after their “prey” (the black Hebrew Israelites), the 1h46m video shows the BHIs making many racist, homophobic, and aggressive comments toward the teens and others, yet the video doesn’t appear to capture any instance of the teens chanting “build a wall” or other racist phrases. Note the second Washington Post article describes the BHIs’ terrible behavior “according to the video” and the teens terrible behavior “according to [BHI] Banyamyan and another Hebrew Israelite.”

But by far the best (most ironic) part of WaPo’s coverage is this paragraph:

The incident, and the finger-pointing that followed, seemed to capture the worst of America at a moment of extreme political polarization, as discourse once again gave way to division, and people drew conclusions on social media before all the facts were known.

You mean people drew conclusions based on media accounts published before all the facts were known? Could WaPo be less self-aware?

The first round of mainstream coverage (NYT, WaPo, HuffPo, etc.) all involved interviews or at least quotes and videos with Phillips but no discussion with any of the teens involved (and no mention of the BHIs at all). It took non-journalists no time to find and review the much longer videos for full context. Now the same outlets that uncritically published headlines such as “Native American man harassed by teens speaks out” are saying “A new video shows a different side of the encounter between a Native American elder and teens in MAGA hats.” All within about a day.

Pew Research recently released a new poll finding that Republicans in particular say the news media doesn’t understand people like them. I’d say that’s a generous interpretation.

Related links:

The Media Wildly Mischaracterized That Video of Covington Catholic Students Confronting a Native American Veteran – Reason, January 20, 2019

Statement of Nick Sandmann, Covington Catholic High School junior, regarding incident at the Lincoln Memorial – CNN, January 20, 2019

Gillette, Culture, and Class

I didn’t really want to write about the infamous Gilette #MeToo advertisement, because I didn’t really care about it. I still don’t, personally. But then a Glenn Reynolds piece at USA Today showed me the controversy in a new light.

In his article, Reynolds made the observation that:

… in America class warfare is usually disguised as cultural warfare. But underneath the surface, talk is a battle between the New Class and what used to be the middle class.

This is definitely something that I’ve noticed. It was one of the things I learned when I did the research for the most frequently-read post here at Difficult Run: When Social Justice Isn’t about Justice. And it totally fits with the fallout I’ve seen on my Facebook feed. Pretty much every single person I’ve seen angry or opposed to the ad comes from a blue collar and/or rural background. Why are they mad? Not because they object with the message of the ad per se (who objects to “hey, stop bullying”?) but because they know they are being talked down to, patronized, and scolded. And they’re right.

And all the folks I’ve seen making fun of them and mocking anyone who has a problem with the ad? College educated, often with a graduate degree, and frequently working as a professional intellectuals. They see it as a culture war issue instead of class war issue because that’s one of the most important functions of social justice activism: to cloak class interest in progressive ideals.

Also, the silliness of anti-capitalists celebrating ad campaigns, no matter how superficially idealistic, is pretty amusing.

But, while we’re admiring the nimble messaging of capitalism, here’s a message that might actually contribute to men being good men.

Currently Working without Pay: Border Patrol, FBI, etc.

© Tomas Castelazo, www.tomascastelazo.com / Wikimedia Commons / CC BY-SA 4.0

USA Today is reporting that many of the federal workers who specifically work to protect our country, and our borders, are working without pay due to the government shutdown. That’s right, Border Patrol, the FBI, and the Coast Guard are working without pay. (Also included: the TSA, but I think the security they add to our nation may be more up for debate).

The author, a Republican, has a lot to offer in terms of why Trump is doing this and how the GOP can let this fight go down in flames while still letting Trump say he did everything he could.

There is not a single person who actually thinks that forcing Border Patrol agents work without pay, or driving them to find new jobs, will somehow increase border security. So why has Trump painted himself into this corner?


I’m afraid that the answer is Trump actually does not care about border security at all. It has been obvious for quite some time that the main thing Donald Trump likes about being president is holding rallies. What he cares about is his “base” — specifically, the people who are willing to show up and cheer for him.

Chris Truax

Finally, if Congressional Republicans “betray” Trump, the stalemate could end, agents could be paid, and the fight for the wall could be taken up another day (if anyone currently in a position to fight for the wall actually wants it).

The kindest thing Republicans can do is to let Trump go down fighting. They should back the Democrats’ efforts to reopen the government and, if necessary, vote to override Trump’s veto. This will straighten out the shutdown mess while allowing Trump to claim he did everything he possibly could to keep faith with his fans but was stabbed in the back by “traitorous” Republicans.


This is a small price to pay for getting cash flowing once again into agencies such as the FBI and the Border Patrol that really do protect America. And being a “traitor” to Donald Trump is far preferable to being a traitor to common sense and the public good. 

Chris Truax

Are Tech Companies Responsible for Harassment on their Platforms?

Ibrahim.ID [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

So far the answer to that question is — No. According to a 1996 law that was originally passed to protect free speech, companies are not liable for speech on their online platforms — including harassment.

After repeated harassment and a restraining order against the dating app Grindr, one man is trying to change that. Matthew Herrick’s ex repeatedly created fake profiles of Herrick, sending men to his workplace and home expecting to hookup. The harassment continued even though the ex was not following Grindr’s terms of service, and Herrick got a restraining order against Grindr in which they were to take down all the fake accounts.  In 2017, Herrick filed a lawsuit against Grindr.

Grindr and other tech groups and companies are relying on the 1996 law to say they are not responsible for third party speech on their platforms.  Herrick’s attorney has turned towards product liability laws — saying Grindr is dangerous and built specifically to allow such harassment.

So, is Grindr responsible for the repeated harassment? Or do apps not harass people, people harass people?  Or is it something in between: should a person have legal recourse if a company doesn’t stick to its TOS?

The Latest in Development Economics

Image result for development economics

There’s a post over at the World Bank’s blog providing brief summaries of the papers presented at the North East Universities Development Consortium last weekend. If you want to see some of the latest research in development economics, check it out. Here are a few that peaked my interest:

  • How does a massive refugee influx affect the receiving economy’s agricultural productivity? In Tanzania, receiving refugees from Burundi and Rwanda in the 1990s resulted in some pluses, some minuses, but ultimately an insignificant change. (Tsuda)
  • In South Africa, income affects psychological well-being AND psychological well-being affects income. The former effect is particularly strong among the poor. (Alloush)
  • Psychology and economics affect each other! An intervention to increase women’s beliefs in their own ability to attain their goals “produces large and persistent increases in employment” in India. And “women who received a job offer have significantly higher [beliefs in their own ability] several months later.” (McKelway)
  • Ukrainian firms from counties with fewer ethnic Russians experienced a deeper decline in trade with Russia because of increased inter-ethnic tensions and a differential rise in negative attitudes toward Russia. (Makarin and Korovkin)
  • Poorly managed schools have poorer teacher practices and poor student outcomes. (Lemos, Muralidharan, & Scur)
  • School disruptions caused by teacher strikes leads to adverse labor market outcomes in Argentina: unemployment is higher, skill levels of the occupations are lower and earnings drop by 3.2 for men and 1.9 percent for women. “This amounts to an aggregate annual earnings loss of $2.34 billion, equivalent to the cost of raising the employment income of all Argentinian primary school teachers by 62.4 percent”. (Jaume and Willén)
  • Getting married one year later in India results in “a significant decline in physical violence, although it has no impact on sexual or emotional violence.” (Dhamija & Roychowdhury)
  • Cash transfers in Kenya reduced physical violence against wives regardless of whether the husband or wife received them, but they reduced sexual violence against wives only when the wives received them. (Haushofer et al.)
  • A multi-year intervention that “engaged adolescents in classroom discussions about gender equality” improved gender attitudes and reported gender-equitable behavior (e.g., “boys report helping out more with household chores”). (Dhar, Jain, & Jayachandran) #RCT
  • A soda tax in Mexico increased gastrointestinal disease because of low-quality drinking water. (Gutierrez & Rubli)
  • Games in Kenya show that spouses don’t totally trust each other. Letting them communicate increase trust a bit. (Castilla, Masuda, & Zhang) #LabInField
  • Christian missionaries settled in healthier, safer and more developed locations in 43 sub-Saharan African countries (early 20th century) and in Ghana (18th-20th century) – this endogeneity led to an overly optimistic account of the importance of colonial missions for long-term development. (Jedwab, Meier zu Selhausen, and Moradi) #RDD
  • A novel index of ethnic segregation – taking into account both ethnic and spatial distances between individuals and computed for 159 countries – reveals that countries where ethnically diverse individuals lived far apart, have higher-quality government, higher incomes and higher levels of trust. (Hodler, Valsecchi, and Vesperoni)
  • An alcohol ban led to an increase in crime in the Indian State of Bihar. Since state capacity and supply of police is fixed, diverting law enforcement resources towards implementing the alcohol ban effectively reduces capacity to prevent crimes. (Dar and Sahay)
  • Workers will privately accept jobs at a wage below the prevailing norm in India, but not when other workers can observe them making the choice. “Workers give up 38% of average weekly earnings in order to avoid being seen as breaking the social norm.” (Breza, Kaur, & Krishnaswamy)
  • Fear of sexual assault reduces women’s labor market participation in India: a one standard deviation increase in sexual assault reports within one’s own district reduced women’s employment probability by 0.36 percentage points, especially among highly educated married urban women. There is no effect of lagged physical assault reports on employment outside home. (Siddique)
  • Cash transfers in Indonesia decreased suicides by 18%. (Christian, Hensel, & Roth)
  • In Brazil, trade with China reduced unemployment for areas exporting stuff and increased unemployment for areas importing stuff. (Brummond & Connolly)

DR Editor in Economic Affairs

Image result for globalization

My article “Is Commerce Good for the Soul?: An Empirical Assessment” was published in the latest issue of Economic Affairs. The abstract reads,

Numerous empirical studies suggest that market exchange helps (a) create the conditions for liberal values to flourish, (b) refine our sense of fairness, (c) promote cooperation with those who are different from ourselves, (d) develop networks of mutual trust and trustworthiness, (e) generate tolerance and respect towards others, and (f) undermine hostility and conflict in favour of peace. This article reviews this empirical evidence and argues that markets make us better people, morally speaking.

You can read the full thing here. Check it out.