It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Thursday, September 25, 2008

Money in the news

Will McCain Defect?

I don't mean "defect" in that he will knowingly be working for Al Qaeda or something like that, just that there is a temptation for him to defect from the public interest in the game theory sense. We do have a sort of prisoners' dilemma setup here.

There is an argument about that McCain has no scruples worth mentioning. On this model he will try to pull a bait-and-switch on Obama regarding the bank bailout, which is widely unpopular and yet deemed necessary by the people who, you know, are all wise and stuff about the economy. Since there is a self-fulfilling aspect to share values and expectations, what is deemed necessary may well be necessary. In any case, the people around McCain surely believe in its necessity.

Would McCain rather be president of a god-awful mess or a citizen of a country and world that still stands some chance of managing to recover from the huge mistakes of the past decade?

My bet is that he can't and won't pull this shenanigan specifically because it is the beneficiaries of the bailout that are running his show. It's pretty telling, though, that we can't be sure which way he'll go on something like this.

And then there is the argument that "maverick" means "loose cannon ". Perhaps his "gut" will tell him to defect just as it tells him "naw, I don't wanna go to Mississippi on Friday and be on TV", and to nominate Palin, and who knows what all else over the next few years.

Related musings by Sam Stein here.

The Alternatives

There are alternatives to a massive government bailout of the U.S. financial industry, according to Luigi Zingales--they just would be more costly for financiers and cheaper for taxpayers.

See also "How I learned to Stop Worrying and Love the Financial Collapse" by Aaron Edlin. Both in a special edition of The Economists' Voice.

Note that they still can say "shibboleth": another article in the issue is "Turn Left for Sustainable Growth" by J. Stieglitz. Sigh.

Bailing Out Galveston

OK, it's pretty small compared to the trillion dollar bailout, but Galveston is not a big city. When does all this spending become inflationary?
HOUSTON — Officials from Galveston will ask Congress for about $2.2 billion in disaster relief this week to repair the battered island’s port, save a major research hospital from going under and rebuild the city’s infrastructure.

The estimate of the damage done when Hurricane Ike raked the island on Sept. 13 was breathtaking. With 57,000 residents, the amount officials are asking for works out to about $36,800 a resident.
Alas, that is our research hospital. I think we should just move it to Austin, which peculiarly has no medical school at all. (Probably the largest American city in that position...) Anyway, I think keeping it, or anything substantial, in Galveston makes little sense.


David B. Benson said...


Abandon Galveston.

John Mashey said...

Well, I wouldn't be quite so cavalier about abandoning Galveston, although that's likely the right answer.

There's science, engineering, economics, and politics, and there ought to be a coherent process. Maybe there already is one on the Gulf Coast? I hear the Netherlands has a plan for dealing with a possible +4m SLR by 2100.

Someone needs to do a joint model, like:

a) Science:
a1) Distribution of SLRs though 2100, maybe 2200.
a2) Statistics of hurricanes.
[Yes, I know there's a lot of argument].

a3) Generate lots of scenarios based on a1 and a2

b) Engineering (civil)
b1) Select some design strategies for different seawalls & infrastructure.

b2) Generate results scenarios based on a1 x b1.

c) Economics
c1) Model economics of b2, generating an ensemble of cost trajectories. Try to use realistic assumptions about energy costs.

This is akin to the Monte Carlos illustrated at Sam Savages's website.

One would hopefully come up with

c2) Ensemble of what it costs to keep Galveston there for the next 100 years.

d) Politics

d1) And *who* is expected to pay for it.

A lot of people just don't seem to think d) is an issue. I think it is a very tough issue, and will be very painful.

I'd expect that David's "abandon Galveston" is the right answer, because I'd guess the results would show "It will be very expensive to keep Galveston there, and the USA will have to pay for it." But I'd feel better if it were arrived at by a coherent process that was pro-active, and longer-range, and warned people in advance.

The SLR part of this is just something that most people aren't use to facing [I say most, because sinking land has the same effect, so NOLA and Venice have seen it.]

When people are hit by a surprise disaster, others want to help out, and that's good, and being part of a big country is a useful form of insurance.

On the other hand, if disasters are predictable and recurring, sooner or later no one else is going to keep paying for them.

David B. Benson said...

Netherlands is planning for a maximum of 1.6 m SLR by 2100 CE.

Galveston is built on a barrier island; as the seas rise the island will be forced inland by wave action.

IMHO hurricanes will become more frequent, but certainly what every hurricanes there are will, on average, be more energenic.

So Galvestonians ought to start moving further north. Those moving to, say, Springfield, Illinois, will, in 2100 CE, enjoy the current Galveston climate.