Pricing Signals

There are really not enough of these in the world. Consider these situations:

1) Person who is on a phone plan does not have a direct cost feedback even if the bill goes up to alarming 6 figure sums.

2) A farmer gets their bill for water, but doesn't know how much their neighbours could have gained by buying it, nor if he could have gained more money selling it than keeping it.

3) Consumers cannot gauge how much petrol is costing them for the car air-conditioner or to get to the petrol station with the cheaper petrol.

4) Polluting coal burning power stations don't know how much local residents would be willing to pay to shut it down or modernise it. Nor how long they would be willing to put up with blackouts to achieve that.

5) Consumers considering whether to hang up their worn clothes or put them in the wash + dryer + ironing. What is the cost/benefit analysis.

At what resolution do pricing signals benefit cost/benefit analysis the most. Would a computer that could make calculations about every single activity throughout your day and have an indicator go off regarding your most inefficient activity be useful?

Would it tell me that (buying and) drinking a can of orange softdrink is the most inefficient because a) it costs a fair amount per calorie
b) They are empty calories that could actually reduce your life expectancy.
c) Sugars will stick to and damage your teeth leading to much higher dental bills.
d) contains preservative 211 which is dodgy at the best of times.
e) contains no caffeine so is ineffective at improving concentration.
f) actually dehydrates you to some extent.
g) is energy intensive to create, can, store and refrigerate, compared to alternatives such as coffee or water.

Suffice to say that any improved pricing signals about anything we care about is a net benefit to resource allocation. Whether it is the environmental cost of the ghg's associated with activity or the amount of money an STD call costs, if there is an efficient market to generate a price which reflects all known information and demand, resources WILL be allocated better. Thus money spent on strategic pre-fire season burn-offs in the outback of Australia may be way, way more efficient than investing the same amount in solar panels or planting trees. Being that people will spend the money anyway, pricing signals cut the wastage for everyone's benefit.

The main danger is not that we will be less efficient ignoring/underutilising cheap fossil fuels, but that we will completely ignore cost/benefit analysis and spend the money in a way which makes us feel good, or which buys our vote without even being in line with the goal central to what the money is being spent on. Thus European countries may use the money on pointless subsidies, Americans may give tax breaks on hand-picked industries. Thus, without even giving themselves a chance at meeting self-imposed targets, they are busy regulating in a way which will reduce their growth prospects.

Various Thoughts

Have had a few different ideas on what to blog on, but no time to knuckle down and actually do it.

* - Putting forth an argument as to why a solid reductions in ghg's via cap and trade will be a boon for those countries exempt due to being underdeveloped.

* - Demonstrating why water allocation trading has great benefits even if it doesn't lead to lower usage - and how this may apply to ghg allocation trading.

* - Expanding on my marconomic stubs to justify panspermia and pre-adaptive evolution.

* - commenting on recent political developments regarding the environment, or Afghanistan.

* - Defining multiple levels of price signals that can make us allocate resources ever more efficiently.

My latest Environmental turn-around

My current global warming/climate change opinion can be summed up as the opposite of what I had summed up previously as my opinion, although in truth there is no facts previously accepted that I no longer hold true nor visa versa.

To sum up: Previously I believed this: Anthropogenic Global Warming is a fact but we shouldn't do anything about it.

Now - I believe that Global Warming is a scientific assertion with little predictive value. However, it has high *proscriptive* value ie. there is value of various kinds in acting against Green House Gases.

The issue to me is that the value of science to predict is that you can adjust what you do to optimise for that prediction. If you know a cyclone is heading your way, you can batten down the hatches - the three to ten day forecasts of cyclones is very valuable. The prediction that my house might be threatened by a storm surge in ten years time is valueless both in a future discounting sense, and in a probability sense.

The idea that there is proscriptive "value" in what climate scientists say comes from the fact that there is benefit in being able to say, "all other things being equal, it is unequivocally better to reduce ghg's!"
This is the same proscriptive value as economists saying "We should reduce trade barriers" among the many correctly proscriptive things experts say in their fields without being able to valuably predict the future (eg. what stocks will go up.)
We do not know how many generations it will take to see the benefits of doing so. It is entirely possible that the next several generations will suffer more by attempting, or even succeeding in a large way to reduce ghg's. It is not a thing that can be predicted. Nor can things that actually make a significant difference - costs associated with actual extreme wheather events. We will be lucky to even have right the most basic easiest question of the next 40 years - will global average temperatures go up steadily, go down steadily, go up and down like a yo-yo or what? Most bets are that it will go up but with several peaks and troughs on the way to confuse things and correctly make a mockery of experts' authority on the matter.

Cursed Pigs

Early this year I met my daughter's Maths teacher at the normal grade 11 parent-teacher meeting (with my daughter). I remember the meeting fondly, as we chatted about family, comparing number of children and ages. Making it easier was the fact that all teachers at this school are referred to by their first names, which makes the meetings more personable. Then we went on and actually talked about Maths, which for me is friendly small-talk conversation much less awkward than family matters. What I remember the most was the colour of her eyes. They were so bright, and must have been green or hazel, but to me they looked bright yellow. Here was someone so full of life and energy and was enthusiastically going through a maths equation. This was many months ago, but last Monday, I got a call from my wife and through my daughter relayed the message that the teacher, 34yo, was in an induced coma due to complications of the AH1N1 flu virus and was in grave danger. Friday came the dreaded confirmation that she had passed away, and suddenly, with a rare death from the disease with absolutely no underlying initial risk factors; the pandemic has finally hit home to me. My daughter said it best as there is no point being angry at any one thing or person - that might be unfair - she is angry at the pigs who first harboured it and passed it on to humans.
Even though there is incredible differences with how different individuals react to the disease, eternal vigilance and accurate updated knowledge of everything about the virus is important to even the most healthy of us.

Marco's Razor & Marcomony

Occam's Razor states that "entities should not be multiplied uneccessarily".When competing hypotheses are equal in other respects, the principle recommends selection of the hypothesis that introduces the fewest assumptions and postulates the fewest entities while still sufficiently answering the question.

In science, parsimony is preference for the least complex explanation for an observation. This is generally regarded as good when judging hypotheses.

Marco's razor states that in cases of imperfect and only circumstantial evidence, entities should be added/multiplied to obtain hypotheses that explain the most unusual aspects of the limited circumstantial evidence available.

Marcomony is a preference for explanations which explain the most about the variability of observations, even if the observations fit within a simpler explanation.

These rules of thumb are ideal for game theory in the analysis of geopolitics. These are the reasons:
1) There really are more entities in these situations. By introducing "representative" entities one at a time to the simplest models, more of the circumstancial evidence can make a best fit.

2)With some entities actively keeping secrets and there being interdependencies more of the information is partial/uncertain.

For game theory in the analysis of geopolitics eg. the Israel-Palestine conflict is simplified to a two entity game in game theory and most arm-chair strategy discussions. A simple addition of a third entity keeps the overall strategy simple enough for the layperson to examine and analyse while explaining better the unusual aspects of the conflict (in this case, the multi-generational longevity of the conflict, the lack of success from mediators)

In evolutionary science occam's razor seems to have been liberally used to simplify explanation of evolution. These have evolved to a raft of "rules", such as the Weismann Barrier, Central Dogma of evolution etc. which are taken as gospel within scientific papers. Challenges to these "rules" are taken as challenges to the overall theory of evolution, which they need not be.

The main motivation with these improved rules of thumb is to:
a) Avoid cliched science such that researchers do not truthify the oversimplifications that are the norm in the reporting of science.
b) Avoid the human instinct to extend the presumption of innocence/truth-telling to dicussions irrelevant to the enforcement or judgement of law.


Another example is the choice between exogenesis and geogenesis theories. All we have as evidence that pertains to this is circumstancial and imperfect. The usual rules of thumb dictate that geogenesis is the least complex explanation. There is no real "data" to fit into a model, but exogenesis explains more of the unusual aspects of the properties of dna based life.

Light of Other Days read

Rather than review this book formally, now that I've read it, I'll just ramble on various thoughts I have until they become coherent to me.

Arthur Clarke and co-author, more than a novel, seem to have sketched a kind of Utopian vision - where technology and circumstance conspire to result in a radically altered World, free of crime, violence and treachery in the face of impending doom. The basic precept can be summed up by the clamly phrase thus "Good information = Increased crime... Perfect information = No crime".

Although I have reservations about the simplicity of this concept, evidence about the effects of good information on crime and war are encouraging. The rise of the internet and video phones everywhere has considerable curtailed certain types of crime/war. New crimes that rely on this new technology have risen as well, but arguably, these new crimes have less scope to be as organised to be destructive to society as the old ones were.

My two objections existing from before I read the novel remain even given the assumptions of possibility within the book:
1) Perfect information is impossible. At the margin the limit of the speed of light will mean that one person will be able to know and react to something before another, and "first-mover advantage" will always be relevant and a source of moral hazard. Even the amazing technology of perfect vision of past and current events evident in the novel doesn't meet, say, the perfection of knowledge attributable to a higher being. The utopian vision, however, makes this point moot, as the available information becomes as good as it needs to be.
2) Both commerce and organised crime rely on an imbalance of information to some extent. If a customer knows as much as a supplier of a product, suppliers will not be able to make a reliable profit. At the margins, this could be considered criminal exploitation, but practically all profitable commerce relies heavily on trade secrets if not outright intellectual property. Not to mention the issue of electronic commerce if secure keys cannot be kept secure enough for people to trust it as a store of value.

Iran democratic pincer movement results

I had described the US's strategy of entrenching democracies in Afghanistan and Iraq as a strategy to squeeze the political system in Iran to breaking point. This appears to be happening. Together with the demographics of Iran (very high proportion of restless youth), this makes for a country ripe for revolution. I can see that the revolution will be repressed, at least for this electoral cycle, but the next few years will be characterised by:
a) Continually deteriorating economy.
b) Continually defiant hardline leadership.
c) Gradually increasing exodus of population to neighbouring democracies.

These sorts of things will continue to make the current theocracy decreasingly tenable, in the medium term.

Possible long term results are a failed/failing state, or a transfer to a fully fledged democracy or dictatorship/permanent state of emergency.

Light of other days 2

Just a few quick notes as I pass the half way stage of the book....

- Clarke is still a genius both as a visionary and a writer. Predictions such as a financial meltdown in London at the end of this decade, and the prediction that the model of journalism would be almost completely compromised by citizen journalism over the internet - have come true pretty well as described in the novel written in 2000.

- There is a lot of liberal use of what I would call "cliched predictions" regarding catastrophic results of global warming for instance and wars labelled as "resource wars". I am giving Clarke the benefit of the doubt with these as pretty much any and all conceivable future weather disasters, and wars will be tenably describable as results of global warming and resource disputes respectively. Being that a complete lack of wars and weather disasters is extremely unlikely, the cliches are likely to stick anyway regardless of other probable causes.

- I keep comparing the scale and timing of technology predictions in this novel to those of the Colour Mars series of Kim Stanley Robinson. Interestingly, Mars becomes Terra-formed in the colour-mars series in a timescale in which put to the "light of other days"(LOOD) would allow humanity to have large scale migration in time to escape Armageddon of the Wormwood - something which is ruled out as a possibility in LOOD's. I have to read and see if this changes by the end of the book.

- On the one hand I fear that the wormhole technology as described with seeming easy extensibility in distance, time, minitiuarization, resolution, cost effectiveness, verifiability and unfakeability is unrealistic as all good technologies have limitations or meet up with diminishing returns in some of these directions due to one or another inconvenient law of physics/economics.

- On the other hand my basic beliefs about information and its relation to crime game theory leads me to believe that even at the most complete imaginable level of information accessibility (as is approaching in this book) by anyone, there will be moral hazard ie. potential for damaging/serious crime.

- I cannot adequately demonstrate this.

Funding of Universities

Chris Fellows writes in the Australian:

I KEEP reading reports ("UNE legal bill rises to $1.3 million", HES online, May 29) that the University of New England receives a larger proportion of its income from the federal Government than any other Australian university as if this were a bad thing.

A public university should be accountable to the public and align its activities with the public interest. This is most likely to happen if it is funded by the citizens of Australia through our federal Government because he who pays the piper calls the tune. Every week I read in the HES stories about universities in trouble because their investments have tanked, or overseas student numbers have dropped, or a sweet deal with industry has led to a conflict of interest.

It would not be in the national interest if the federal Government provided 50 per cent of the navy's funding and forced it to obtain the rest by offering cruises and hiring ships out to foreign countries. Equally, it is not in Australia's interest to make public tertiary education - a critical part of our national infrastructure - dependent on narrow sectors of the community, or overseas customers, whose goals may not align with those of the nation.

Marconomically speaking, of course, I disagree with the specifics of the assertion, that universities are better for the country if they are run by the public purse, while at the same time agreeing with the gist that "Infrastructure" should be publicly funded.

The question is, which aspects of a university are "infrastructure" (Long term investments which benefits a lot of people, with no easy way to charge the people that benefit), and which aspects are products and service that people need and/or desire at an individual level, are willing to pay for, and private enterprises can make money from it by providing it the best way?

The infrastructure aspect of a University (Buildings, utilities, roads, long term equipment, general research projects etc.) ought to be funded publicly, and the Product/service aspects( gaining qualifications suitable for employment, industry specific research and development etc.) ought to be funded privately.

The private enterprises ought to be charged a rental and or tax for the infrastructure aspects which they use to sell the products or services which they charge for.

This issue screams that Universities should split off private arms, and look at divesting the aspects that are better handled by private enterprise.

Light of Other Days

Have started to read this book by Arthur C Clarke and some other guy. Like with "The God Delusion", I had some preconceived ideas regarding its main gist, as outlined by reviews on Wikipedia etc.

For instance this assertion: "Crime would cease to exist with the availability of "worm-cams", because no-one could avoid being watched"
is one which I would like to poke holes through.

But I must admit, Clarke, unlike Dawkins, is a visionary even in my strictest Marconomic sense, and his assertions are unfalsifiable in the way they are laid out as part of a science fiction novel anyway; so as much as I am preparing arguments that demonstrate the holes in his, I am being swayed in equal measure by other aspects of the novel.

Sydney Thoughts

Here I am in Sydney, glad that I don't live here. Townsville Brass is doing quite well here at the Nationals and you can see the results after sunday afternoon.

I was going to pick the post that I have mulled over the most that had not got any comments and my New year stuff was the most recent. I will have to look further afield for more.

08/08/08 still marks for me the end of the good times in the same way the stockmarket crash of October 1929 marked the end of the roaring twenties, and the start of the slide into deep recession/deflation/increasing instability.

Democracy - a counterexample

Back a few entries where I was discussing democracy, the general assumption is that many people who are able to independently check policy before voting on it will more likely get the right decision than a particular individual or expert could.

The corollary is that the more democracy and the more direct the democracy, the better general decisions will be made.

A counter-example to this corollary is immigration and trade policy. Democracies have a notorious habit of restricting immigration and trade when the economy deteriorates. Even though the concept is that as citizens, we have the right to make bad choices, and pay for them, democracies continue to make the wrong call due to the primacy of perception over facts in the political game. The causal relationship between restricting trade/immigration and a worsening economy is ignored over a very strong human instict to blame externalities over any systemic internal cause.

Thus people continue to promote fallacies such as "reducing immigration helps our unemployment rate" and "restricting imports helps our unemployment rate".

Maybe I am wrong. Maybe democratic countries will leave tariffs and immigration quotas untouched, while autocratic countries will clamp down on trade/immigration during the current downturn. I would be surprised.

A democratised stimulus

The latest payments as part of the stimulus, which as far as I can tell are indiscriminate cash quantities for just about everyone registered with the Govern-mint, have an appeal to me even as it mindbogglingly blows my mind thinking about future taxes required to pay it back eventually.

Essentially, instead of bailing out whatever, or dictating prices for bread, etc. it empowers the individuals acting independently. If they deposit it in the bank, it strengthens that bank's capital in a way that bailouts couldn't. We will have more that we can decide to donate for disaster relief, improve our individual bottom line such that fear of destitution is allayed, without it being enough to feel that we are rich and can be reckless. Of course fools and their moneys are soon parted, which means the money should eventually concentrate in the hands of the less foolish. Eventually it should filter through to profits or income to someone who will then pay tax.

It neither attempts to save those that have lost everything in the crunch, nor does it punish those that profited from payouts from entities requiring bail-outs. WE decide who is deserving of our measured piece of this stimulus.

As a counter-cyclical plan from a government that has been very conservative through a boom, it is almost masterful. To get the impression that this sort of thing can be done at any other time for any other reason, is foolishness.

Global warming - just polite conversation while we are waiting for real news

From: business spectator article

Perhaps it’s all just different ways of politicians who are under pressure from rising unemployment trying to appear to be doing something about global warming, while not doing anything at all.Europe’s method is to have a cap and trade scheme that doesn’t work. Australia’s method is to propose one that does not happen.


Back in 2007, I said:
When there are no "World" wars to talk about, no "great depressions" happening, the conversation will almost always turn to the weather :).

Maybe this slide into deep recession worldwide is just a symptom that the world has nothing interesting left to discuss other than the weather.

Perhaps I was a bit harsh on Miranda Devine

Back in 2006 I derided her for trivialising the effects of Cyclone Larry.

But now after a pointed attack on greenies, I am starting to come round to her style.

Individual action and carbon emmissions

From getup

Dear friend,

We thought long and hard about sending you this email, because we like to promote the idea that our individual actions make a difference. But we have to be honest about the Government's current climate policy.

Under their current proposal, action you take at home to reduce energy - like changing to efficient light bulbs and appliances or installing solar hot water - will not reduce Australia's total greenhouse emissions further than the Government's weak target of 5-15%. It will even make it cheaper for industry to increase their own emissions.


I may have got into this in detail in my other posts, but I think I am hearing the penny drop for climate activists. I reiterate what I said in other posts, that individual actions, even without the Rudd proposal mentioned above, do not proportionally reduce overall emmissions, because of the rebound effect and that individual actions tend to absolve guilt without being optimised for a nation-wide reduction of any amount.

However, like with water allocations, reducing carbon emmissions further comes down to a simple buying of emmission allocations, and then not using them. It actually sounds simpler than worrying about whether your net emmissions are going up because you use the money you saved on electricity to buy toys for your kids (WHICH ONE IS MORE CARBON INTENSIVE???) I think that in a decade, if the Murray floods again, and the Government has bought all these water allocations, it could make a mint selling them again.

Collective Political Decisions

I am still trying to make a reply to Anonymous's comment

A much more robust and satsifying system than American or Australian 'democracy' with a proven ability to function in a multicultural environment. referring to the very democratic Swiss model.

There is some things we can learn by How animals make collective decisions, and the point I was trying to make was that I judge collective systems by how regularly they come up with the "right" decision over how regularly they reflect majority opinion.

The recent Australian stimulus package wrangle was a case in point. With the Swiss model they would be wrangling longer, and come up with a worse "populist" decision in the end anyway. The Australian senate is unequalled in both investigating policy and in coming up with appropriate amendments quickly.

It is not enough to grow trees one must also sequester!

The trouble with letting wilderness grow untouched by humankind is that sooner or later, it is going to burn (Not if you are in a rainforest). What is the point of growing trees to capture carbon, wilderness areas to encourage wildlife when it's going to eventually burn, sending uncontrolled black carbon and carbon dioxide into the air and killing vast swathes of native wildlife. Why not graze away the underbush with suitable farm animals, sequester large swathes of trees (eg. turn it into furniture, etc.) to make fire breaks, and contract Australia's army to make choices on various risk-reduction controls to take it out of the hands of NIMBY-minded councils and state governments.

Nick Xenophon is RIGHT

What better time is there than RIGHT NOW to buy off (by buying their water allocations) farmers in the Murray-Darling. The most likely thing that they will do with their windfall is to move to somewhere more sensible, like the Burdekin, Atherton Tablelands or N.T. farming areas, bringing their farming experience, and getting cheaper water allocations, and lower fire risks.

Two's and Nines

Pretty ordinary day, other than delivering your own child in the delivery-ward shower before breakfast.

Some Photos:
Dry and warm at last



Name: Abigail Talia
Date: 09/02/2009
Time: 08:15 am
Weight: 3540g
Hair: Dark







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