Another Canadian economics blog! And yet another!

The University of Victoria economics department has provided us with two - count 'em, 2 - new economics blogs in the last few months.

David Giles' Econometrics Beat has been up for a while now, and he is to be congratulated for writing a blog on the required course that almost all economics students would much rather avoid if they could. (The reason they can't is that econometrics is incredibly important. You students out there: trust me on this.)

And today I learn that Chris Auld has just started his own blog. It's still new, but he has already come up with (among others) this gem about how David Suzuki simply doesn't understand what is arguably the most important concept in environmental economics.

The Canadian econ blogroll on the right-hand side has been updated - attentive readers will have noticed that David Giles' blog had already been included. Go read them.

Update: And yet another! HEC-Montréal's Martin Coiteux has been blogging for a year or so. Those of you who can read French would do well to check it out.

Comments

[Donald Pretari]

BTW, although I can read French, to some degree, at least, I also use a Word for Word Translation App that helps. People should try that on Martin's Blog.

[Eric Crampton]

If you counted Canadians blogging from abroad, your list could be a bit longer....

[Guillaume]

Martin Coiteux's blog is a little light on economic analysis and quite heavy on politics, with some clear partisan tendencies (not that he hides them). He seems to like taking a side in a debate more than anything else. Doesn't make it a lesser blog though.

Thanks for pointing out the other two!

[pangloss]

I checked Auld's note re David Suzuki, and though I'll check back for any other "gems" he may provide I suspect implicitly, being charitable to Auld, saying Suzuki is anti-intellectual may have left more than just me wondering about Auld's ego than Suzuki's method of making a point, at the expense of economists.

[Frances Woolley]

Pangloss "saying Suzuki is anti-intellectual may have left more than just me wondering about Auld's ego than Suzuki's method of making a point, at the expense of economists"

As regular readers of the comments section on this blog know, I often disagree with Chris Auld. But I completely agree with Chris Auld's point when it comes to David Suzuki's comments.

If David Suzuki was simply having a go at economists, that would be fine - some of us need to be told "get over yourself" occasionally.

But by discrediting economic analysis - and particularly the concept of externalities - David Suzuki does harm to the very thing that he purports to care about: the environment.

It's all very well to talk about the beauty of nature etc etc. But admiration of nature's beauty doesn't stop people from driving SUVs, wantonly flying across the country or around the world, or flushing toxic chemicals down their sinks.

Economic incentives, on the other hand, do change people's behaviour: when the price of gas goes up, sales of SUVs plummet and people think twice about flying some place.

Exeternalities analysis is a powerful way of thinking about how economic incentives can be used to reduce environmental damage.

Now the work that David Suzuki does might be important in terms of mobilizing public support for otherwise unpopular policies - carbon taxes, for example. So I'm not going to dump all over him for the outreach and educational work that he does.

But if David Suzuki really wants to save the environment he would be better off teaming up with economists - like the group of BC economists who were so influential in lobbying for a carbon tax in that province - not attempting to discredit economic analysis.

[Stephen Gordon]

What Frances said.

[Jacques René Giguère]

Totally agree with you Frances. Suzuki should learn to work with economists.
But so many of us in the profession , not reatricted to the corporate ones,act as mere shills for the corpocracy that for most of the public, even the informed one, we are viewed as the Mikhail Souslovs and politruks of the western world.

[Jacques René Giguère]

Guillaume:
Though I much appreciate Martin Coiteux from back in the days when I was more present at the Société Canadienne de Science Économique, we have to remember he is from the Écoles des Hautes Études Commerciales. They are a business school, with all the attendant baggage and have no problem having some of the most austrians like Nadia El-Grably on their staff.

[Patrick]

Clearly Suzuki doesn't understand what economists mean by externality, and personally I think pricing-in externalites can help, but I don't think he'd change his mind. I could be wrong, but I guess he would not see internalizing externalities (as understood by economists) as a step forward. It still allows for wrecking the environment so long as one pays enough. And no doubt he would point out the difficulty of pricing negative externalities.

Here's a scenario: Along comes a technology X that makes everyone's life WAY better, but using it will lead, indirectly, to the death of all the Blue Whales (or whatever species) on Earth. Given that we don't use Blue Whales for anything other than watching anymore, it's not hard to imagine that the NPV of all future whale watching is much less than the NPV of using technology X. So the Blue Whales are gonna die. I can't think of a single economic reason why people in 2011 would opt to have a worse life than they would otherwise for the sake of not killing off all the Blue Whales. Of course, if one were able to have Blue Whales price their own existence and feed that price into prices set by humans, things might be different. But we can't, and we don't. So that leaves us with moral and philosophical arguments against killing all the Blue Whales.

Come to think of it, if we replace Blue Whale with Polar Bear, and technology X with internal combustion engine, we have a real situation that is playing out as we speak. And the Polar Bears are loosing.

I think Suzuki is ultimately appealing to our morality and he's attacking economics - clumsily in this case - as a way to focus attention on the moral arguments, which he evidently believes make a stronger case.

Sadly (for the non-human residents of the Earth), it doesn't seem to be working very well. I'd be surprised if there where Polar Bears in the wild by the time my 4 year old son is my age. It'll be a pity, but he probably won't be economically all t hat worse off for it. He might even be better off because goods from China will be that much cheaper because they'll be able to come-in through the ice free NW passage.

[Frances Woolley]

Patrick - those are thoughtful and insightful comments.

A few thoughts -

- the standard economist's response is that taking the moral high ground can lead to worse solutions, e.g. kids buying marijuana because (being illegal) it's untaxed and thus cheap; a ban on ivory sales driving hunting underground and leading to illegal poaching (whereas legal ivory sales would give people an incentive to care for elephants).

- economics influences moral views see, e.g., that graph on the recent post about health care on the religion showing the strong correlation between religiosity and per capita GDP

- and then there's the grolars, the seriously nasty polar/grizzly hybrid, which will be the polar bear's revenge for everything that we've done to her species...

[Marc Labbe]

45 years ago 99,9999% of the people living on the thing we call earth were looking at it as an open system instead as an close-loop system. Today we are probably at 99,5%. The vision of Mr Suzuki is earth is a close-loop system, and in a close-loop system; externality does not exist. It is to the economist to adjust, that's all.
1-. Economists do not undestand.
2-. Waste of time talking to the economists, the ROI is marginal
3-. :-)))

[Nick Rowe]

Marc: ever heard of a guy called "Malthus"? Malthus was a professor of political *economy* at Haileybury. We (economists) *invented* all that stuff about finite resources and closed-loop systems that Suzuki goes on about.

Suzuki is a geneticist by profession, right? Like Darwin? Where did Darwin get his ideas? Two of the people he credits are Malthus and Adam Smith.

The "externalities" economists talk about certainly do exist in a closed-loop system.

1. Environmentalists do not understand.
2. Waste of time talking to environmentalists, the ROI is (not "marginal", that's another misunderstanding) very small.
3. :-)))

[Marc Labbe]

Never heard of something called Engineering and Thermodynamic

We invented the concept of systems by a few centuries before the economists

[Frances Woolley]

Eric - the Canadian Economics Association gives out a $10,000 award (the Rae Prize) bi-annually to the top "Canadian" economist. They had to have a committee to decide what Canadian meant. I don't remember what they decided.

Stephen - does Offsetting Behaviour count as a Canadian economics blog given that it's written by a Canadian-in-exile?

[Marc Labbe]

To put some lights on the vision of what is a close-loop systems

http://en.wikipedia.org/wiki/Closed_ecological_system

[Nick Rowe]

OK. I've read it. It's basically what I expected. A biosphere.

And if you want to understand what an externality is, you can start here:

http://en.wikipedia.org/wiki/Externality

[Nick Rowe]

And Malthus:

http://en.wikipedia.org/wiki/Thomas_Robert_Malthus

[Marc Labbe]

Ok

But let say side effects, unintended consequences, collateral damages, conception error, stupidities would have been a better name and less contoversial than externalities

thumb up or thumb down

[Nick Rowe]

"collaterall damages" might have been a better name. Except we want to allow for collateral benefits as well, in some cases. "Third party effects" could have been better. (The first and second parties are the buyer and seller).

Hey, economists aren't very good at naming things!

[Marc Labbe]

By the way, i really like this guy

http://en.wikipedia.org/wiki/Jay_Wright_Forrester

[Stephen Gordon]

Why on earth does it matter what it's called? It's a concept whose definition has been reproduced in a thousand textbooks. Suzuki doesn't get to make up his own definition and attribute it to economics.

[Marc Labbe]

1-. i am sure Suzuki does not read economic textbooks and he does not care.
2-. He is the important guy ( full open to discussion) but do not tell him he is full of shit, he will get mad
3-. He is on a mission....(crusader)
4-. He will not get funding from economists or not much compare what he thinks is foundation needs
5-. The engineering concept of a close-loop systems is more widespread than the economists one (open to discussion too)

[Stephen Gordon]

None of these reasons is worth taking seriously.

[Marc Labbe]

If you want to get a message across, it will be a lot better if you speak a language your interlocutor will understand or the ivory tower argument, or smilar, will come back bitting you.

[Bob Smith]

Come to think of it, every event I've been to at which David Suzuki has spoken, he's teed off on economist as well (along more or less the same lines described above and in the Auld post). You sort of wonder what the source of that hate-on is? I note he did his PHD in zoology at the Univerisity of Chicago, maybe its economists used to beat him up and take his lunch money or something.

Is it a comment on the public perception of economists that David Suzuki thinks that crapping on economists is a good talking point? Or is the fact that the audience invariably laughs when Suzuki makes those cracks a comment on the economic illiteracy (and general ignorance) of the environmental movement (and those members of the public who are drawn to it)? Or both.

[Stephen Gordon]

From Krugman's 'Anatomy of anti-economics':

[T]here is a lot of bad-mouthing of economists. This is understandable. After all, suppose you are, say, a military expert who has decided that he is an economic expert too. You write an article or even a book on the subject; then an academic economist tells you that all of your ingenious arguments are familiar fallacies covered in an undergraduate textbook, and that your basic thesis involves a contradiction because you do not understand national accounts. You might decide that you really should go back and read a basic textbook; more likely, you begin denigrating economists as pompous types who actually don’t know anything.

And finally, the bad-mouthing of economists, by people who typically have rapport with their audience because they share that audience’s misconceptions, reinforces the perception that economists have nothing to offer – which encourages more non-economists to declare themselves experts, enter the fray, and reinforces the cycle.

David Suzuki is telling his audience what they want to hear. He doesn't seem to care if it's correct.

[Marc Labbe]

To Stephen Gordon:

Suzuki is telling is version of the truth and whatever he thinks will advance the ''cause''

Newspaper are full of our truth

[Marc Labbe]

Suzuki = politician

with whatever come whit it or not

[Determinant]

Interestingly enough when I tried to introduce some undergrad Control Theory on closed-loop systems here in this blog with some math, I managed to totally baffle Nick even though I was trying to be gentle.

Sometimes I despair that different sides of the academy just don't talk to each other enough.

[Nick Rowe]

hey, no fair! Just because i can't do math doesn't mean I don't know what "closed loop" means! It means my car's check engine light is not on.

[Stephen Gordon]

And as I said before, some of us do teach optimal control theory, in both discrete and continuous time. Pontryagin and Bellman are old friends of mine.

[Determinant]

Eh? It's the math that tells us all about the behaviour of the system, what weaknesses it has, under what conditions it will be stable and under which it will be unstable, what outputs can be expected, all the fun things analysis tells us. But in order to do that we need math. There's no way around it.

I don't just want to know what it is, I want you to be able to use it!

You were discussing well-known concepts from Control-Theory and I thought that by looking around the Control Theory Body of Knowledge we could sail past the boring Pile of Stuff We Already Know to the much more exciting Heap of Undiscovered Things. However when you saw the algebra you fell off the discussion cart.

Shortly thereafter the discussion cart crashed and burned.

[Stephen Gordon]

Marc: I don't understand how being wrong in the name of truth can make any sense at all.

[Stephen Gordon]

Sometimes getting the math right is crucial. Sometimes the math is a minor side issue that doesn't affect the main point. But even when the math is important, you still have to be able to explain it in English.

[Patrick]

I think Suzuki is being entirely genuine. I don't think he's just saying what the audience wants to hear.

What I get from him is genuine terror that human beings are going to do so much damage to the environment that it will ultimate lead to a cataclysm like the Permian-Triassic extinction.

And before anyone dismisses that as hyperbole or hysterics, consider; a few thousand humans with nothing more than spears and semi-domesticatd dogs managed to wipe out all the mega-fauna in North America. Better believe we can do a whole lot more damage today.

To make an economics based analogy: if we think of the Earths life support systems as an equilibrium system like the economy, then Suzuki is really like Shiller or Farmer and others (maybe even Nick?) who have been warning that things can go terribly wrong very suddenly, and they can stay that way.

In economics the consequences can be pretty bad when the macro-sytem goes off the rails - unemployment, misery, wasted lives, etc. In biology, when the the macro system goes off the rails, we all die.

In any case, humans are currently performing a range of radical and uncontrolled experiment on the very equilibrium sytem that keeps us all alive. Barring nuclear holocaust, rest assured that we ain't going to break the Earth, but we may find that the new equilibrium that results is one sans humans. Survival is entirely optional.

[Patrick]

So to bring it back to the Auld post - sure, Suzuki got it wrong, and yes he's taking a cheap shot. Ragardless, the big picture he paints is one we ought to take seriously.

[Marc Labbe]

If i offense some people, sorry

Let keep in minds, Mr Suzuki wants to reach the vastest audience possible. Also his definition of a close-loop system does not allow for external influence.

Since almost all the people he is talking to are not economists and know close to zero about economic theories, he cannot afford to (seem to) agree with the idea or concept of "externalities".

It will only confuses the audience.

Look like, a conflict of interest, is not?

[Mike Moffatt]

I like David Suzuki, but there's no denying he's a cheap shot artist.

In 1989 Suzuki came to UWO to debate Phillipe Rushton. Rushton's a prof in the psychology department who made all kinds of negative headlines in the late 80s due to his research on race and intelligence.

Here's some background from the CBC: http://archives.cbc.ca/science_technology/natural_science/clips/3727/

I (along with almost everyone else) was hoping that Suzuki would debunk Rushton once and-for-all. Instead Suzuki basically Godwinned the debate, calling Rushton racist over and over and never addressing a single one of Rushton's points.

Suzuki thoroughly embarrassed himself up there and had people feeling sorry for Rushton. He basically tried to score the cheapest points possible and kept working the crowd instead off debating Rushton. My father-in-law (a highly respected academic) took my wife to the debate and ended up leaving 2/3rds of the way through, telling my wife that the debate was not indicative of what goes on in academia.

So all of this is nothing new. If David Suzuki has the choice between engaging someone in debate or making a cheap shot at their expense, he invariably chooses the latter.

[Bob Smith]

Patrick: "In any case, humans are currently performing a range of radical and uncontrolled experiment on the very equilibrium sytem that keeps us all alive."

Isn't that always the case? Everything we do is uncontrolled experiement, that's the nature of living on a single planet in a universe where time is linear. The same critique could be leveled, with equal validity, at policy proposals advanced by David Suzuki and his crew.

[Bob Smith]

"he cannot afford to (seem to) agree with the idea or concept of "externalities"."

Why not? The whole point (and I think Frances made it earlier) is that the economic analysis of externalities is consistent with, indeed reinforces, some of his less goofy policy proposals (i.e., a carbon tax). Far from helping his case, his ignorance (or intentional misrepresentation) of economic thinking on the issue denies him a valuable tool for making his point. Think about it, rather than crapping on brain damaged economists, wouldn't it be a more effective argument (among those people who aren't already true-belivers) if he said: "Look, even the brain-damaged economists agree with me on this. If THEY agree with me, why don't you?". Far from trying to reach as wide an audience as possible, Suzuki's problem is that he's gotten too used to preaching (or perhaps pandering) to the converted.

[Nick Rowe]

To add to Bob's second (8.49) point: his crapping on economists also supports the view that he has a hidden agenda, and doesn't want to really fix things with Pigou taxes. That he's a "watermelon" (green on the outside, red on the inside).

[Patrick]

Bob 8:39 - I disagree. Humans are the only creatures on earth that aren't 'price takers' w.r.t the environment.

[Bob Smith]

Patrick,

I'm not quite sure I get the "price taker" reference in this context, could you elaborate?

[Nick Rowe]

Patrick means (might mean): we are smart enough to collude like monopsonists and move along nature's supply curve.

[Nick Rowe]

And imposing a quota or tariff (Pigou tax) on ourselves would be one way to collude.

[Marc Labbe]

Market failures = Externalities

right?

[Frances Woolley]

Marc: Market failures = Externalities

Nit-picking: All externalities are market failures. Not all market failures are externalities.

[Bob Smith]

Nick: "we are smart enough to collude like monopsonists and move along nature's supply curve."

Fair enough, but I'm not sure that responds to my more fundamental point, that regardless of which policy option we choose, its an uncontrolled experiement with possible adverse consequences (both unforeseen and otherwise).

[Patrick]

Bob: What Nick said.

People are the only creatures that can make informed choices about how we affect nature's LRAS (long run in human terms - in cosmic terms it's all totally pointless because the accelerating metric expansion of the universe implies it will eventually be a cold, dark, empty void).

[Bob Smith]

Patrick,

I don't disagree with that point (we are, as far as we know, the only creatures who make informed choices that have global consequences (and, with the possible exception of some higher order life forms, informed decisions about anything else), although we certainly are not the only creatures to affect, for better or worse, the global environment - Human's exist in no small part due to "creature" induced climate change, namely the oxydization of the earth's atmosphere by photosynthic bacteria. Good for us, not so good for 95% of the then-existing species who were wiped out). But I think that misses the point.

Regardless of what policy choices we make, they'll be, at best, imperfectly informed choices, making any policy we choose an experiment. The only difference between David Suzuki and Ross McKitrick (other than the fact that Ross McKitrick knows what an externality is) is a difference of opinion regarding the experiment to be conducted and the expected result (in terms of cost/benefits of the alternative treatments).

[Patrick]

" not the only creatures to affect, for better or worse, the global environment"

Over long time scales, I agree. On short times scales, we are the only ones.

"... they'll be, at best, imperfectly informed choices"

Oh, no doubt. But it's the case where we choose to disregard or ignore what (limited) information we do have about the consequences of our choices that I'm interested in. But that isn't limited to the environment. People make demonstrably dumb policy choices all the time on all sorts of issues, so I suppose it's really a more general problem.

Personally I'd say that on global warming McKitrick is to climatology what Suzuki is to economics. Neither is qualified to opine on climate models, and in their respective areas of ignorance both should be ignored.

[Shangwen]

On a positive note, Suzuki's comments on economics are certainly than Margaret Atwood's. Maybe the G&M could put her on the back burner for a while and let Dr. S. have some airtime...please....