Although we’ve been on the same panel once before, Minnesota sociologist “Chris Uggen”:http://www.chrisuggen.com/ clearly travels on a “rougher conference circuit”:http://chrisuggen.blogspot.com/2006/12/mickey.html than me.
A quick question about the Social Security debate last year that CT readers may be able to help me with. I remember some newspaper somewhere publishing an article in which un-named Democrats thanked bloggers like Josh Marshall for helping corral the mavericks during the Social Security debate. Does anyone remember where that article is? More generally, actual evidence on whether bloggers did or didn’t influence this debate would be helpful (I’m pretty sure that they did, but hard evidence on this is difficult to come by).
MSNBC prints a puff piece from Forbes on Richard Branson’s approach to charity – he’s been for it since September, apparently. “At Bill Clinton’s Global Initiative in New York, Branson pledged all proceeds from Virgin Group’s transportation divisions be donated to develop alternative fuel sources and alleviate global warming. His pledge amounts to about $3 billion over ten years.”
But get this: “Branson didn’t even believe in global warming until five years ago. Then he read Bjorn Lomborg’s, The Skeptical Environmentalist.”
Just imagine if he had been reading Quiggin’s posts – on his own website back to August, 2001, and here and here and here and here, for example. On the other hand, could it be that Lomborg served as the thin edge of the wedge and that Branson allowed himself to be convinced by the evidence only because the “solution” Lomborg presents is pretty much to wait until technology solves the problem? Regardless, and not to quibble about the definition of “charity” at work in the article, it’s certainly good that Branson is putting money toward developing alternative fuel sources.
In yet another round of the controversy over discounting in the Stern Report, Megan McArdle refers to Stern’s use of “a zero or very-near-zero discount rate”. Similarly Bjorn Lomborg refers to the discount rate as “extremely low” and Arnold Kling complains says that it’s a below-market rate.
So what is the discount rate we are talking about? Stern doesn’t pick a fixed rate but rather picks parameters that determine the discount rate in a given projection. The relevant parameters are the pure rate of time preference (delta) which Stern sets equal to 0.1 and the intertemporal elasticity of substitution (eta) which Stern sets equal to 1. The important parameter is eta, which reflects the fact that since people in the future will mostly be richer than us, additional consumption in the future is worth less than additional consumption now.
Given eta = 1, the discount rate is equal to the rate of growth of consumption per person, plus delta which is 0.1. A reasonable estimate for the growth rate is 2 per cent, so Stern would have a real discount rate of 2.1 per cent. Allowing for 2.5 per cent inflation that’s equal to a nominal rate of 4.6 per cent. The US 10-year bond rate, probably the most directly comparable market rate, is currently 4.44 per cent; a bit above its long-run average in real terms. So, Stern’s approach produces a discount rate a little above the real bond rate.
Arguments about discounting are unlikely to be settled any time soon. There’s a strong case for using bond rates as the basis for discounting the future. There are also strong arguments against, largely depending on how you adjust for risk. But to refer to the US bond rate as “near-zero” or “extremely low” seems implausible, and to say it’s below-market is a contradiction in terms. It seems as if these writers have confused the discount rate with the rate of pure time preferences.
Tom Bartlett at the _Chronicle_ sat down Michael Bérubé and David Horowitz for lunch a couple of weeks ago. The results are “here”:http://chronicle.com/free/v53/i16/16a00801.htm. It’s interesting and enjoyable; Horowitz clearly doesn’t have much of an idea of how to deal with an interlocutor who doesn’t take him Very Seriously. All in all, Horowitz doesn’t seem particularly bright.
Josh Marshall links to a Michael Novak piece in the Standard – a piece that is surely the apotheosis of Green Lantern foreign policy (well, until next week); complete with vulnerability to the hideous yellow streak that is the MSM.
It begins … horribly:
Today, the purpose of war is sharply political, not military; psychological, not physical. The main purpose of war is to dominate the way the enemy imagines and thinks about the war.
Read those two sentence again.
Other bits (in which our author is pretending to speak in the voice of an Islamist terrorist/insurgent, but I think he’s just being bashful):
The weaker political will yielded to the stronger will …
Yet, as always, will followed storyline. First comes narrative, then the acts that give it flesh in history …
In such wars … whichever party maintains the stronger will, along the most durable storyline, always wins …
I really don’t know what to say. War is a continuation of punditry by other means? Have I got that right? It’s looking increasingly like sheer intellectual inconsistency on the part of the neocons and warbloggers that they have not marched on – and levitated by force of will – the New York Times building. What’s stopping them?
For background reading I suppose you could try Mailer’s Armies of the Night