Category: One-handed!

I’m not typically a fan of lawyers, mostly due to experiences of (a) immoral behavior in pursuit of winning at all costs and/or (b) writing laws that increase demand for lawyers without increasing quality of life.

Now, let’s look to a few good aspects of lawyering that I have recently had the (mis)fortune — due to legal disputes — to be reminded about:

Lawyers are good for…

• Giving you advice and an alternative perspective.
• Supporting you in a dispute (=someone on your team)
• Understanding legal details, processes and norms.
• Working for you when you’re busy elsewhere.

So, let’s not kill all the lawyers — not just yet 😉

ps: In countries with populations from multiple cultures, it’s useful to have rules — and the lawyers to enforce them — to reduce friction (thus, spending a bit on lawyers to save a lot elsewhere) and help everyone get along. In more homogenous cultures, customs may be more important than rules in terms of delivering less friction at lower cost. But those cultures can run into serious issues if, for example, they start to diversify, cultural norms are no longer shared, and there is no tradition of using rules (and lawyers!) to work out disputes. Tricky.

There are many examples of where one group dominates another and limits social change.

Examples: Men dominating women, whites dominating non-whites, citizens dominating migrants, etc.

Some dominants like their power but others in the dominant group may not. Let’s assume that those who are dominated do not like it (sorry masochists!)

While thinking about this combination of power structure and interaction, I came up with the following 2×2 (I love 2x2s!) example for “men’s” and “women’s” bikes:*

This figure shows three things:

1. Men who ride on cross-bar bikes and women who ride on step-through bikes are “supporting the patriarchy” in a passive or active way. That’s how things do not change.**
2. Women who ride cross-bar bikes are fighting the patriarchy, which may work but probably will not, since they are the victims of patriarchy.
3. Men who ride step-thru bikes are ignoring the patriarchy, which weakens it. If enough men stop caring, then the patriarchy (with respect to bikes) will collapse.

These observations are not based on justice as much as real-politiek, in the sense that shifts of power are far easier when they come from above (evolution) than from below (revolution). I do not state this fact as something I agree with; I state it to clarify (a) how people on the two-off diagonals (fight and ignore) are allies in changing the status quo and (b) how much easier it is when defectors from the oppressor class help those in the oppressed class.

Can you make such a 2×2 for your causes? Vegan diets? Gun control? Reading books? Go ahead!

My one-handed conclusion is that bottom-up social change is much harder without some top-down help.

*Here are some critiques of those “differences,” which I agree with. I’m just using the streotype as an example.

** Here, via RB, is the A-Z of the all-inclusive bike seat (see image):

Genesis 1:26-28 says:

Then God said, “Let Us make man in Our image, according to Our likeness; let them have dominion over the fish of the sea, over the birds of the air, and over the cattle, over [g]all the earth and over every creeping thing that creeps on the earth.” So God created man in His own image; in the image of God He created him; male and female He created them. Then God blessed them, and God said to them, “Be fruitful and multiply; fill the earth and subdue it; have dominion over the fish of the sea, over the birds of the air, and over every living thing that [h]moves on the earth.”

Many people have interpreted these passages as (a) an unlimited license to exploit the Earth and all its flora and fauna as well as (b) a guarantee that nothing can go wrong, since God said it was ok.

Ignoring the Bible’s origins as the writings of (self-serving) human males, rather than the literal word of God, let’s look a bit deeper, via God’s guidance on vows:

When you vow a vow to God, do not delay paying it, for he has no pleasure in fools. Pay what you vow. It is better that you should not vow than that you should vow and not pay. Let not your mouth lead you into sin, and do not say before the messenger that it was a mistake. Why should God be angry at your voice and destroy the work of your hands? — Ecclesiastes 5:4-6

So it seems important to keep your promises, especially to an all-mighty, all-seeing God.

But Adam and Eve did not do that in the Garden of Eden:

Genesis 3:22-23:

Then the Lord God said, “Behold, the man has become like one of Us, to know good and evil. And now, lest he put out his hand and take also of the tree of life, and eat, and live forever”— therefore the Lord God sent him out of the garden of Eden to till the ground from which he was taken.

So, let’s recap:

1. God gave everything to Adam and Eve, with the condition that they not eat of the Tree of Knowledge.
2. Adam and Eve ate of the Tree (I’m not going for the misogyny of blaming Eve).
3. God punishes them by exiling them from Eden and condemning them to go get their own food (“to till the ground”), which — IMO — also voids God’s gift of dominion “over every living thing…”

My one-handed conclusion is that believers (and the rest of us) have NOT (since around week 2 of the universe’s existence ;)) had (a) an unlimited license to exploit the Earth and all its flora and fauna or (b) a guarantee that nothing can go wrong. Or, to put it differently: We’ve over-reached in both our rights and our security… and look where that’s got us:

I heard that “humans and food for humans” takes up 97% of the Earth’s biomass, meaning that only 3% of the biomass was still “wild.” Based on this post, I looked at the data, which shows that “humans and food for humans” compose 95% of the “land creatures” with the remaining 5% going to wild animals and birds. If you include fish, mollusks, worms, spiders, etc., then the share of “humans and food for humans” drops to 5%. Such a switch is not good news, IMO, since (a) our 95% share of “land creatures” was much lower (say 50%) 100 years ago, when populations and meat eating and land clearance were all lower, and (b) we are also impacting worms, fish and other species that will go extinct in the Anthropocene.

Who in God’s name will save the Earth from its “guardians”?

Addendum (8 Oct): We should all go vegan, to reduce agriculture’s footprint by 70 percent — thus feeing land for nature, ecosystems and biodiversity.

I learned, via GS, that some Berkeley researchers have proposed [pdf] that  customers should pay for electricity based on their income.

Thus, I would pay half of what you would pay if I made half the income you did.

This is a terrible idea, IMO, but I can see how we got here, which I explain in two phases: charges related to costs (points 1-3) and charging rich people more (points 4-7):

1. Utilities have fixed and variable costs and they recover those costs by charging customers fixed and variable prices.
2. Utilities that are trying to green themselves and/or accomplish social goals need to make additional capital investments (transitional costs) that need to be financed by today’s customers on behalf of tomorrow’s citizens — some of which are customers but most of whom are stakeholders.
3. In a “neutral” scenario, costs and prices are matched, i.e., fixed charges (via prices to customers) cover fixed costs. In a “conservation” scenario, variable charges are raised above variable costs and fixed charges lowered below fixed costs, to encourage people to use less electricity or water or whatever. One side effect of this scenario is that those who use more pay more. Another is financial instability (a change in use results in different changes in costs and revenues). I discuss these issues in my paper on pricing water.
4. Payment for utility services, like payment for ice cream or gasoline or a mobile phone, are meant to reflect the seller’s costs and the buyer’s willingness to pay (demand for that good) — not their ability to pay (income available for all goods).
5. But lots of utilities are regulated to achieve social goals that have nothing to do with normal pricing. That’s why there are sometimes “social tariffs” (=cheaper prices) for poorer people, which requires subsidies of some sort.
6. Social tariffs doesn’t work very well in practice (see pp 131-133 of my paper), since it requires a lot of extra information, doesn’t match reality (people lie; bureaucrats mess up), and distorts behavior and choices. It’s better to help poor people by giving them money and leave prices alone. If there’s a need to bring more money into the system, then change the mix of tariffs, taxes and transfers that pay for costs, i.e., “neutral prices” to cover operating utility costs (tariffs) and transfers from the state government to cover transitional costs. Those transfers can come out of state income tax revenues that already exist, are easier to change, put the burden on people with more income, and do not distort prices/decisions.
7. Utilities should not charge income taxes, and neither should any business or branch of government providing goods and services. Keep willingness to pay separate from ability to pay. (There’s a legitimate problem risk of a slippery slope here, i.e., setting prices for goods and services based on income, which is a total information nightmare even before considering that richer people will leave to a place with “fair” pricing.)

My one-handed conclusion is that the Berkeley researchers are excluding state income taxes because they need a local solution, but this one (a) has terrible optics, (b) won’t work very well, and (c) dodges the big question of how much extra the rich will need to pay to subsidize the poor in a sustainability transition.

NB: Criterion (c) also applies to the global fossil fuel transition, which is not going well. Only a fraction of the $trillions per year that are needed is getting paid.

This post updates my Jun 2022 post announcing the paper because I have extensively revised the paper (shortening, correcting, elaborating) before sending it out to a journal for review.

I don’t know when we will get news from the review process (somewhere between 1 day and 6 months), so here are the highlights:

1. We started the paper to see how bureaucratic prices for parking lined up (or not) with market prices for housing. Both prices should go up in “popular” neighborhoods. If they are misaligned, then opportunity costs for misallocation rise. To check alignment, we used GIS and ratios of parking prices to housing prices, which made it easy to compare areas across the city.
2. Our first pivot came when we realized that people park by the hour (tariff, for visitors) or year (permit, for residents), so we compared both.
3. Permit parking takes 80% of spaces to earn 20% of parking revenue. That’s because permits are inefficiently cheap, so bureaucrats increase tariffs (€7.50 per hour and rising) to try to squeeze out visitors. Here’s the imbalance:
4. Although I had heard of Amsterdam’s autoluw (“nearly car free”) policy, I did not know that it dates back to a 1992 referendum to remove cars from the city center. But, there are now more cars (and parking places) in the center than in 1992, so progress is slow.
5. According to our analysis of ratios, permit parking is too cheap everywhere, and tariff parking is too cheap in Noord, which will harm quality of life as that district develops. This map shows the ratio of tariff to living prices (Noord in red):
6. The city is not raising permit prices to reduce demand. Instead it is trying to build more supply — underground and underwater parking garages — for permit holders. Spaces in these garages cost €80,000-230,000 to build in our three examples, but the city isn’t even recovering its operating costs in permit revenue. So its spending €millions of citizens’ money on capital projects that will never earn their cost back.
7. We recommend increasing the price of permits from current (€500/year) levels to around €3500/year, which is what (other academics have estimated that) people are willing to pay.
8. Such an increase, over time, would reduce the number of cars by around 40 percent, freeing 50,000 spaces for other uses (and removing the need for costly garages). The extra revenue (around €300 per citizen per year) should be used to improve neighborhoods.

You can download the paper from here.

We are happy to hear your corrections and suggestions for improvement!

I recently met Bruce Lankford, an experienced irrigation expert, at a small conference in London. He was annoyed that policy makers misunderstand the basic facts of irrigation, and especially in how they encourage “efficient” practices that may not be. They assume, for example, that drip irrigation is “modern and efficient” whereas flood row irrigation is “traditional and inefficient.”

He sent me his 2012 paper: “Fictions, fractions, factorials and fractures; on the framing of irrigation efficiency” [pdf].

While reading it, I realized that the debate he’s engaging is not “policy relevant” to economists like me (totally in line with his brilliant Table 1).

Let’s break this down:

Irrigation specialists, managers and the farmers who use irrigation systems really need to pay attention to how much water goes where.

• Managers need to make sure the system delivers water fairly (with respect to rights) and evenly (with respect to operational performance).
• Specialists care because they want to have consistent measures of performance, which are needed if one seeks to improve performance or redesign systems.
• Farmers care about efficiency to the extent that it allows them to get “more crop per drop.”

None of these concerns need be relevant to policy-makers and economists, but they often are.

Why?

Policy makers/politicians love free-lunches, and “efficiency improvements” allow them to give more water from the same volume. With water scarcity and food demand rising, who would not want to grow more food with the same quantity of water? But that goal is vulnerable to accounting errors and tricks, which often means that “win win” systems (on paper) are “win lose” or “lose lose” in reality.

What’s going wrong? Hayek would say that information is too diffuse and unstructured to be aggregated and (effectively) used by centralized decision-makers. And I would agree, which is why I have — for years — favored the simple, but crude policy of allocating irrigation rights with the assumption of 0% efficiency, i.e., 100% consumption of the water.*

This assumption means that “saved” water is a gain to the farmer with rights, another farmer, or the environment. It also means that “efficiency gains” do not come at the expense to non-irrigators.

For example:

• Ten farmers each have rights to 5 units of water in a watershed with 100 units of water.
• If efficiency is 0%, then all 50 units are used, and 50 units are left for the environment.
• If efficiency is 60%, then each farmer “uses” 3 units and 2 units are “lost.” Overall consumption of 30 units leaves 70 units for the environment.

A win for ecosystems? Typically no, since a policy maker would say “Wait! We can allocate those 20 units of saved water to 7 farmers (rounding from 6.67), with the assumption that they also use 3 and lose 2, so now farmers are using 50 (it’s really 51), and 50 still goes to the environment! Win win!”

But now say that farmers get “more efficient,” and reduce losses from 2 to 1 unit per farmer. Now 17 farmers use 68 units. If they reduce “waste” to zero, then they use 85 units! The environment suffers, even though rights are exactly the same.

This process is not just made up — it’s the default, since policy makers like pleasing farmers, and the environment is a terrible lobbyist.

That’s why I support 100% consumption/0% efficiency when allocating rights.* In that case 50 units are allocated and “used” on paper, while the environment gets 50 units on paper. If the farmers “waste” 2 units each, then 20 units ALSO go to the environment, so my conservative accounting provides better protection to the flows that sustain ecosystems — and us.

Farms, as businesses, are profiting from their private use of water that is, fundamentally, a resource owned by citizens. That means that they should not operate if that damages ecosystems (qua public goods). Although that is often the case, it should not continue in a climate changing world, due to the rising value of the ecosystems we still have.

Oh, and my “one unit, all consumed” (OUAC!) preference also helps with water markets and trading. If rights are somehow defined in terms of (non-zero) efficiency, then trading or transferring rights is difficult without complex re-balancing to reflect the efficiency of the buyer. With OUAC, those changes are interesting to farmers, but policy people can ignore them.**

And let me be clear: efficiency, losses, flows and other measures of what water goes where is totally important and useful to farmers and irrigation managers. They need to open and close gates; they need to maintain head flows; and they need to make sure crops get the right volume at the right time, but all of those details — pace Hayek — need not be aggregated to policy makers or into water rights.

My one-handed conclusion is that water rights should be simple to understand and compatible with other water uses, without creating risks and crises if and when practices, technologies or use-location changes.

*Read a few of these:

• From farms to cities (Apr 2008) — how to do it right
• Craig Wilson is wrong about ag water use and so is Peter Gleick (Jan 2011)
• The irrigation efficiency conundrum (Bredehoeft Feb 2011)
• Water rights: diversion or consumption? (2012)
• Chris Perry on water rights (Perry May 2018)

**A change of point of use (or time of use) does have impacts, even with OUAC rights. I still support those adjustments, which are calculated with formulas, for example in the Murray-Darling Basin (Australia).

I’m not sure when I first heard “Nature always bats last,” but the idea stuck with me as more sensible than threatening, since Nature is merely a system without feelings about humans as a species, and there is always the possibility of some reaction to our many actions.

The key idea in the phrase is not that “Nature will win” but that we cannot always imagine how Nature (anthropomorphising here) will “react” to our actions.

But I never knew where this phrase came from, until I was asked to cite the source in a recent paper (pesky academics, asking you to justify your claims!). It didn’t take me too long to track down the source on the internet, and — lo! — it’s from a 1969 column (“Eco-Catastrophe!” [pdf]) by Paul Ehrlich.

Ehrlich was famous for his 1968 book, The Population Bomb, which predicted mass starvation on the basis of excessive population growth. He is also famous for being wrong in that book, as well as when he accepted the “sucker’s bet” from Julian Simon on whether people are good or bad for sustainability (read this and/or this).

And he is indeed again wrong, in some many annoying ways, in his 1969 piece:

1. He extrapolates the dangers of DDT (a slow-moving toxin) into a catastrophic ecosystem collapse. Although Rachel Carson was right to identify the dangers of DDT to ecosystems in her 1962 Silent Spring, Ehrlich was wrong to assume that regulators would not just ignore the risk but (it seems) allow for a massive expansion of its production.
2. He claims that waters and air would be catastrophically polluted when reactions were “in the pipeline”: Earth Day 1970, and the Clean Air and Water Acts of 1972.
3. He misses the forcing effects of GHGs on climate, unlike his contemporaries.
4. His obsession with (over)population blinds him to alternatives, as well as other risks (affluence, which he mentioned).
5. He makes over-the-top claims, such as US life expectancy dropping to 49 years in [future] 1973, when it was 71 years in [reality] 1969, or that famines would occur (at the optimistic latest) by the 1980s. Although he gets some other idea right (politicians obsessed with GDP, ocean food chains crashing if plankton die, the USSR China offering aid in exchange for political loyalty and access to resources), the mix of mistakes and accuracies makes it look like he’s just guessing.

Indeed, he makes so many that a blogger at the Competative Enterprise Institute, which tends to lean to the looney right, has plenty of material to critique (before over-reaching to deny the risks of climate change).

This result is sad. I get it that Ehrlich was genuinely worried, but he undermines his useful point — Nature bats last for example — in his haste to rant about his never-ending talking point (population). That’s a one-handed failure to connect with his audience.

“Geo-fencing” refers to a program that enables (or disables) some function based on physical location.

“Privacy” is something we tell people we care about but don’t really defend against violation.

It’s a fact that many mobile phone apps track our location to harvest and sell our geo-data to anyone.

(It’s also fact that mobile phone companies sell this data in some places, and that some stores track us via bluetooth pings. I’m not talking about these dubious practices here.)

So I think mobile phone operating systems (i.e., Android or iOS) should allow you to “geo-private” yourself within x km of various places you specify. Then geo-data is not collected (and thus not available) to any and all apps on your phone.

Example: I live in Amsterdam. I tell my phone to not track me within 15 km of my home. That, more or less, turns off all tracking while I am in the city, which is fine by me.

This system will resotre power to those whose data is being harvested and sold: you and me.

My one-handed conclusion is that mobile phone manufacturers/operating system owners should make it easy for us to protect our privacy.

Since 2009, I have talked about a 20/80 rule of motivations, e.g., “My rule of thumb is that about 20 percent of people conserve [water] because it’s the right thing to do, and 80 percent conserve because it’s expensive NOT to [because prices are high].”

My point is that far more people (80%) are motivated by price (extrinsic incentives) than doing the right thing (intrinsic incentives).

This rule can apply to many areas where personal action has collective consequences, e.g., eating meat, flying, littering, cheating, etc.. (Read my The Little Book of The Commons for more 🙂

The trouble is that my 80/20 rule is easy to confuse with other “80/20 rules,” such as 80% of profits (or problems) come from 20% of products or customers.

So I am renaming mine the 90/10 rule, for two reasons:

1. Less confusion (other 90/10 rules are not common).
2. 90/10 has more empirical support than 80/20.

Let me explain the second point:

In my research on the provision of public goods (this or this) I used games to understand people’s behavior.

In these games, around 10 percent of people are cooperators (helping others, unconditionally), 10 percent are defectors (helping themselves, unconditionally), and 80 percent are reciprocators (help others or themselves, depending on what others do). In this article [pdf], for example, 4% and 12% of students behaved as cooperators and free-riders, respectively.

So the share of cooperators is “small” (4 is around 10 percent, right?), which means that they do not dominate, but neither do free-riders.

So the question is how to motivate the reciprocators, and whether they will be convinced to pursue good or bad policies/behavior, by cooperators or free-riders, respectively.

In my opinion, reciprocators will follow the lead of cooperators if “social mechanisms” support cooperation and punish defection. Such mechanisms (or “institutions”) are composed of informal norms and formal rules, and they are the key to a group’s survival, prosperity, and perhaps downfall.

Are rules necessary for cooperation? No. We share in social situations; we cooperate against common dangers.

Do rules hinder freedom or block innovation? No. Rules help people with different tastes and goals collaborate, by setting expectations in some areas while allowing exploration, innovation and diversification elsewhere.

Are rules elitist? No. Rules assist the weak against the rich and powerful who use their independence to dominate others.

My one-handed conclusion is that rules are useful for getting along in a 90/10 world.

(Economists often evoke ceteris paribus — “holding all else equal” — when proposing that an idea from one place can be used elsewhere. They forget that place, people and time matter.)

I start teaching a course on institutional evolution tomorrow.

The main focus is on how institutions (“the rules of the game”) change — or not — over time, either due to outside (exogenous) or inside (endogenous) pressures and actions for change.

Cultural evolution is one such force that can be seen as exogenous or endogenous towards one institution or another. It’s “the secret of our success,” but also hard to direct or control, since it takes place over decades or centuries.

What I find most interesting (and daunting) — in terms of understanding institutional evolution — is how (1) the rich and powerful try to avoid or co-opt institutions, and (2) institutions vary from place to place. Let’s look at these in turn.

(1) The Rich and Powerful

The rich, as F Scott Fitzgerald explained in The Great Gatsby, are different:

“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”

This famous quote covers two important elements: the way the rich grow up different and the way that the rich cynically look after themselves rather than trust others.

These differences are obvious when looking at the commons, since the rich tend to (a) set themselves apart from others when it comes to cooperation and (b) ignore the value of the commons in a world where they can buy whatever they want.  (Here’s a post on these issues.)

These facts mean that the rich are often “defectors” when it comes to the commons, whether they are evading taxes or hiring private guards to protect against public chaos. (The poor — as with this Brazilian example — must cooperate to protect themselves.)

Such anti-social behavior should be condemned by the non-rich, but it’s often accepted — and even applauded — by “poors” who (c) prefer might over right and (d) support the rich because they think — via a Dunning Kruger delusion — that they too will be rich some day. (“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires” — Ronald Wright, 2004.)

So we get a difficult situation in which the rich take advantage, the poor support them, and civilization decays.

Place to place

It takes effort to create, enforce and obey rules. Everyone tries to avoid such costs, so social norms need to reinforce obligations as well as protect rights because no community can afford to protect rights while ignoring obligations. (Even anarchists depend on reciprocation.)

In tribal and “primitive” societies, the rules are old, well-known and vigorously enforced. Local people can count on those constraints, which makes it easier for them to cooperate in the expectation of reciprocation or act freely in the knowledge of which rules constrain or oblige. Such “culture” allows everyone to get along.

In “modern” societies where anonymity and free-movement makes it hard to build a reputation or avoid cheaters, cooperation and punishment are harder to encourage and enforce (respectively). The rich insulate themselves and the poor cope. Since neither has much faith in collective action, inertia (path dependency) dominates.

So people just leave — like I did for the Netherlands from the US or like others facing a much harder road from poor and failed states like Syria, Venezuela, et al.

It’s not easy to find a place in a new land, people, culture and institutions, but plenty of people take those risks with the hope of reaching “a better place.”

(The Dutch are sharp dealers, and they are hardly as friendly as Italians, but the Dutch can tolerate an individualistic culture on top of their mostly functioning institutions while the Italians need solidarity to deal with their domestic chaos.)

My one-handed conclusion is that it’s important to recognize the blessings and challenges of one’s culture, as well as the choices of “exit, voice or loyalty” when one’s culture is not providing the quality of life you want.