Mickie Glantz has an interesting post up on his FragileEcologies Blog in which he muses about whether or not politicians can be bought. I gained some insight into this question during my orientation for my current fellowship, as we were addressed by a number of former officeholders. One of them argued that politicians aren’t generally bought by campaign donations or bribes, though this sort of thing happens. Instead, the process is much more mundane. Donations buy access to the politician. The politician then sees you around, says hi to you, starts to recognize your face, and after enough of these sorts of events, might even feel like s/he knows you. At which point you have the ability to talk to them about your pet issue, and argue for it . . . and if the politician doesn’t have a strong stand one way or the other, s/he just might think that you are a good person, and you care a lot about the issue, so why not go with your point of view? This, so the argument went, is how donations really come to affect lawmaking, votes, etc.
Now, finding an issue that the politician has no feelings about is hard – people follow voting records, etc.. And politicians generally have their survival in mind when they vote. So there are limits to this means of influencing politicians. But if this is how it is done, it is much more subtle and complex than the simple story of bribery, etc. that we seem to fall into when we discuss such things. Thus, how policy is made is also much more complex than a simple story of big money shaping votes directly. In the end, the story does run out in the same manner, because the people who can afford to attend a bunch of fundraisers in which they can shake their congressman’s/senator’s hand are by and large wealthy, and so that wealth is buying access and possibly influence. At the same time, it suggests that working on campaigns for elected officials might provide similar access without the need for so much money – so perhaps activists might consider that route?
Category: policy
We're not all that powerful, really . . . and Jeff Sachs, please shut up. Please.
I somehow missed this NY Times article on our impending failure to reach the Millennium Development Goals (MDGs). Hey, it was my first week at work. In any case, a few thoughts on a topic that should be getting more discussion.
As I’ve told my classes time and again, the MDGs are the sort of thing that everyone can embrace. The NYTimes gets it right:
For all the bitter debates pitting nations against one another, there is conspicuously little disagreement over the United Nations goal of eliminating dire poverty. Virtually none of the countries that signed onto the endeavor in 2000 faults the idea of eradicating hunger, educating children, improving maternal health or combating disease. It would be like opposing mother’s milk.
Ah, but saying you want to eliminate suffering, and actually doing it, are two different things. And at the end of the day, we have two big problems. First, we live in a finite world where some of us consume so much that it creates real challenges for the rest to get to comfort, if not affluence. Put another way, if we want everyone to live at an average American standard, we need to come up with between 2-3 Earths worth of resources (see posts here and here). So, there is no way to achieve the MDGs without making hard choices . . . which leads to my second point: the rich countries do not feel an impetus to make these hard choices. At least for now, poverty/hunger/suffering are things that happen to large numbers of people somewhere else (we conveniently forget our own poverty belts, like Appalachia and the inner cities) for the average policymaker – we’ll just build really high walls to keep all “those people” out. Big kudos to Esther Duflo for pointing this out:
“If we miss the goals, who is going to punish us?” asked Esther Duflo, a development expert at M.I.T. “Nobody is going to come from Mars and say, ‘You didn’t reach the goals, so we will invade’ — there is no onus.”
But while this open assertion of the problem was necessary, I think Duflo is wrong about the fact nobody is going to punish us . . . well, perhaps not literally wrong. However, you can only limit the opportunities of the global poor for so long before we start seeing things like ecological collapse in agricultural systems, or the destruction of the rainforests, as the poor are forced into choices they would rather not make. No wall is high enough to guard against a changing climate or a disrupted global economy. We’re playing Russian Roulette, only adding shells to the chamber each time we miss easy goals like the MDGs, or fail to act on the changing climate. No, the aliens may not come to get us . . . there’s no need. They can just wait until we get ourselves.
Oh, and the Times felt the need to quote Jeff Sachs. Again. And he was wrong. Again. Jeff Sachs, for God’s sake shut your piehole. Really. You are a supremely arrogant man who has wasted his considerable intelligence by not listening to anyone, not reading any economic or development history, and not really learning any of the economic geography you profess to be furthering. Your brilliant idea for development, the Millennium Village Project, is a failure – I called that one four years ago – and yet you will not shut up. Will reality ever intrude for you? For the press? You are the D-list reality star of development . . . every time we try to look away, you perform the intellectual equivalent of taking off your top and running around, only we’ve seen this show before and nobody cares or wants to see it again. Put on your shirt and go read something by someone other than yourself, then come talk to us.
Hoping we are either stupid or uninformed . . .
A while back, I put up a post about how the US failure to pass climate legislation is screwing up the entire process at the global level. While the Chinese are enormously problematic, and the Indians are not much better, our domestic political scene’s inability to come to any sort of agreement on anything that might look like a climate bill makes us the single biggest obstacle to addressing emissions productively. What most people do not understand is that legislation is not the only way to control emissions here in the US. In 2007 the Supreme Court held that the Environmental Protection Agency not only could, but indeed had to treat greenhouse gas emissions as a pollutant under the Clean Air Act. Thus, we can control emissions via the regulations put forth by an agency of the executive branch, effectively cutting Congress out of the loop (unless they want to revoke or amend the Clean Air Act, and nobody seems to have the votes for that). Hey, that is what the Court said, and what the Court says is the law until Congress rewrites things or the Court reverses itself.
So when people start arguing that the EPA’s impending move to actually come into compliance with the law is something “dangerous”, “activist” or “unwarranted”, they are hoping that the reader/listener/viewer doesn’t know the history or legal background of the issue – and they would often be right. Certainly, that is the tactic of Mackubin Thomas Owens at the Washington Times, who in a recent Op-ed ignored this case, calling the possibility of controlling emissions through regulations a “ploy” and a “naked power grab by the EPA.” So, let’s review, shall we?
I have no doubt that this is a tactical effort on the part of the Obama administration to force some of those blocking real climate legislation to come to the table and negotiate something they can live with. However, I don’t think the term “ploy” applies here – this is not an effort by the executive to do some backroom deal, such as consolidating power executive power at the expense of the other branches (for studies in that, see the Nixon and Bush 43 presidencies). The president and his people surely know that regulation is a much weaker form of emissions control than is legislation. One need only read the Washington Times Op-ed to see why, as they argue “a constitutional perspective suggests that Congress, not unelected bureaucrats, should be setting U.S. policy.” Even with the backing of the court, it is much easier to argue against regulations (however legally empowered) created by the bureaucracy than it is to argue against a law passed by a majority (or, in the case of the Senate, a supermajority) of both houses and signed by the president. Let’s also remember that the rest of the world is watching us to see what we do – and likely will build off of our domestic legislation for any global agreement (to ensure we participate). Domestic regulation, especially if it is contested, will never work as a similar foundation, and it is entirely likely that the Senate would not ratify any agreement predicated on that regulation (2/3 of the Senate must vote to ratify). If we want a global deal that even beings to address our problems, then the EPA must be an intermediate step toward binding legislation.
Now, do agencies grab for power when they can? Of course they do. But in this case, the EPA laid back until the Supreme Court told them, in effect, they had the right to regulate greenhouse gases under the Clean Air Act. In fact, one could argue that once the Court placed greenhouse gases under the purview of the Clean Air Act, the EPA had no choice but to move toward regulating emissions lest it fall out of compliance with federal law. After all, the court found:
“EPA has offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change,” Justice John Paul Stevens wrote for the majority. The agency “identifies nothing suggesting that Congress meant to curtail EPA’s power to treat greenhouse gases as air pollutants”. . . The court majority said that the EPA clearly had the authority to regulate the emissions and that its “laundry list” of reasons for not doing so were not based in the law. (via Washington Post)
This is how politics, policy and the global environment intersect, folks – turns out those civics courses were a lot more important than we realized at the time, huh?
An aside about education . . .
I am, at least part of the time, an associate professor of Geography at the University of South Carolina. I am in DC right now because the university has been kind enough to grant me a few years of leave to take up this fellowship (and who are we kidding, I’m saving them my salary and benefits in a time of budget crisis – everyone’s a winner!). So the subject of education and its purpose still lurks in the back of my mind, even when I am away from campus.
I was struck by an opinion piece in the NY Times today about literary criticism – the piece itself is fine, if a bit esoteric unless you’ve spent a long time working in some of the areas of theory the author references. I was, however, struck by one passage:
“research model” pressures described are beginning to have another poorly thought out influence. It is quite natural (to some, anyway) to assume that eventually not just the model of the sciences, but the sciences themselves will provide the actual theory of meaning that researchers in such fields will need. One already sees the “application” of “results” from the neurosciences and evolutionary biology to questions about why characters in novels act as they do or what might be responsible for the moods characteristic of certain poets. People seem to be unusually interested in what area of the brain is active when Rilke is read to a subject. The great problem here is not so much a new sort of culture clash (or the victory of one of C.P. Snow’s “two cultures”) but that such applications are spectacular examples of bad literary criticism, not good examples of some revolutionary approach.
This jarred me into thinking about the relationship between the sciences and the humanities – I have a sort of unique background, having held an Andrew W. Mellon Fellowship in Humanistic Studies and a National Science Foundation Graduate Research Fellowship while in grad school – I have straddled these worlds. This makes me sensitive to their relative positioning in the academy. On most large research-oriented campuses, the sciences dominate – in large part because the sciences are avenues to large grants which the university can collect huge (40-50%+ depending on the school) overhead charges that contribute to the bottom line. Even internal funding opportunities at these universities tend to be science oriented, as the hope is that the small internal grant will spur research that eventually brings in huge research (and overhead) dollars in a sort of academic multiplier effect. In an era of rapidly shrinking budgets (South Carolina has been completely decimated by cuts over the past four to five years, despite the astonishingly disingenuous claims about our funding by Governor Appalachian Trail)*, these research dollars are crucial to the survival of all kinds of campus programs and jobs. But at the same time, this creates a hierarchy that is rarely openly voiced, but always felt, on these campuses – research dollars are what matters, and everyone else needs to facilitate those who bring them in or get out of the way.
This worries me greatly – an inadvertent side effect of all the budget cutting these days is the collapse of the liberal arts education on our campuses. This has implications for how students write, think, etc. In short, it damages our ability to produce the sorts of citizens that a functioning democracy requires for its survival. I’ve often said that I would rather talk to an intelligent person who disagrees with me than someone who agrees with me without understanding why – this idea, it seems to me, is the central premise of how our society should function. But without training in the arts, in literature, in history, in other languages, we lose tools central to our critical faculties . . . the ability to tell right from wrong, to understand when we are being lied to, to imagine new ways to express ourselves and be heard, to be inspired by those who have gone before us. In short, as we focus in some sort of myopic all-out charge toward science and math, we are not building a stronger America. We’re creating a country full of little worker bees with no ability to think beyond their tiny little jobs. Nothing could weaken this country more.
And as for the idea that the humanities should look to the sciences for models and theories . . . read Einstein’s Dreams by Alan Lightman to see what the humanities can do for theoretical physics. My father gave me that book years ago, and it is still one of the greatest things I’ve ever read.
Fund the humanities, dammit.
*Note: in the linked article, the reporter has his numbers wrong several times, which is distressing. USC now takes closer to 10% of its operating budget from the state – the state is now the FIFTH most important source of funding on our campus, after THE BOOKSTORE.
Shuffling the deck chairs?
I recently had an e-mail exchange with Rick Piltz over at Climate Science Watch (I link to them regularly, and if you are not familiar with the site, you should check it out – it is an activist site that does very good work) about the whole Cucinelli circus. At the end of that exchange, Rick mentioned that with the upcoming IPCC plenary the question of Patchauri’s leadership was once again on the table. This got me thinking . . . and I shorthanded an answer to him that I think I can expand on here.
For those not neck-deep in the world of climate change, Rajendra Pachauri is the chairman of the Intergovernmental Panel on Climate Change (IPCC). The IPCC is the authoritative scientific body working on the issue of climate change – it is empowered to review the existing literature and evidence (it does not do its own research) and present what amounts to a summary of our best understanding of what is happening to the global climate and why it is happening. (full disclosure: I have been appointed to the IPCC for this round as a review editor – basically, I will manage the peer-review process for one of the chapters).
The IPCC has come under fire quite a bit – in my opinion, mostly because the scientific story of climate change is getting clearer and clearer, and it is not a happy story. However, there have also been screwups – for example, some of you may have heard how a completely unrealistic assessment of glacier melt in the Himalayas somehow got through review into the last IPCC report (this melt is important, as it tells us how much flooding to expect downstream (i.e. northern India and Bangladesh, among other areas) in the near term, and how much the river flows of the region will decrease once the glaciers have largely melted (potentially creating significant food crises in the same areas). I wasn’t completely freaked out by this error – it is large document that is hard to manage, but the review process is very comprehensive. It’s just not realistic to expect a review, compiled by hundreds of scientists and reviewed by hundreds more as well as representatives from the participating governments (including the US), to come together flawlessly in a reasonable timeframe. However, when this popped up, the handling of it was botched – it was more or less the classic error: instead of identifying, acknowledging and fixing the error, at first the IPCC was seen to be stonewalling and trying to defend an undefendable statement. At one point, Pachauri issued a remarkably tone-deaf statement in which he effectively called India’s Environment Minister “arrogant” and dismissed the Indian Government’s report which seemed to contract the IPCC findings. Even if the IPCC report had been correct in its claims, this could have been handled better. However, the IPCC claims were wrong, and the Indian report was closer to the truth . . . which makes this a disaster. The whole event badly damaged the legitimacy of the IPCC in some people’s eyes, and was fodder for those who would deny the role of human beings in climate change. It was a PR disaster, really – the overall science of the report is, in my opinion (and it is an informed opinion) quite solid. If nothing else, note that as the models of climate get more sophisticated, their results are mapping ever closer to observed reality . . . and the models are predicated on widely accepted understandings of the causes of climate change brought forth through exercises like the IPCC assessments. Still, it was bad.
Add this to the fiasco from this summer (in which I’m afraid I was a visible participant), where the IPCC secretariat, in Pachauri’s name, issued guidance to members of the IPCC on how to interact with the press. The letter was astonishingly poorly worded to sound like those of us on the IPCC were not to speak to the press at all, when what was meant was that we were not to represent the entire IPCC report by ourselves to the press (in other words, we can speak to the press and say “in my opinion . . .” and be fine, but we cannot say “The IPCC says/believes/thinks . . .” because we do not speak for everyone on the IPCC). The meaning of the message was completely innocuous, but the initial wording was very unclear, and set off something of a firestorm.
So, does tone-deafness qualify as a reason to throw the chairman under the bus? Well, if you think that the chairman’s job is to be a media spokesperson, maybe it is. But if the chair is to run the larger IPCC process, I don’t think replacing Pachauri changes anything – it’s just finding a scapegoat to make it look like the panel has been reformed or something – which I strongly object to, as I don’t think the IPCC needs reform. The process is sound, the author selection is sound, the data is sound (yes, I know some people have issues with the data, but the vast majority of the scientific community does not – so I am going with them until such time as I see new evidence – though I remain open to new evidence, as our understanding of the climate as a complex system is incomplete, at best). So replacing Pachauri might actually be read as an admission of guilt or problems with previous IPCC reports that I do not think exist – there is no systematic rot here.
Besides, this round of the IPCC has already started – the authors are selected, and the first plenary will meet soon. So changing the chair now will do nothing but create administrative confusion. And the importance of replacing Pachauri rests on the assumption that the chair has a lot of power – and the post does not, in the grand scheme of things. In the end, the IPCC is an intergovernmental process, which means that the diplomatic process in large, key countries like the US greatly constrain and shape what the IPCC can do – probably more than the chair can. You’ll notice an absence of calls for replacement from the diplomatic community, which tells you what they think. More to the point, Pachauri still has his job – if any major country had an issue, he would be out. For an illustration, take a look at what the Bush administration did to Bob Watson, the previous chair of the IPCC. The Administration withdrew support for him (and there is documentary evidence to suggest that they did so because ExxonMobil really wanted him gone) and that was that.
So, in the end I vote to keep Pachauri in place. I think he is sincere in his efforts to get outreach right, both in terms of his own statements and in terms of the dissemination of the IPCC reports. He knows the process. And the governments are, for now, backing him, so all of the demands for removal are going nowhere right now. That said, I fear he may be one more public gaffe away from someone in the diplomatic world getting fed up and demanding a replacement . . . and that would not be good for the IPCC process during this assessment report.
Naiveté gets us nowhere . . .
So the Tianjin climate talks have come to an end with little outward sign of progress, despite protestations to the contrary by UN Climate Chief Christina Figueres (via AFP):
“I would dare say that this week has got us closer to a structured set of decisions that can be agreed in Cancun,” said Figueres, the executive secretary of the U.N.’s Framework Convention on Climate Change. “This week, governments had to address together what was doable in Cancun. … They have actually done that.”
In her defense, it is Figueres’ job to be a cheerleader for the process, so she sort of had to say that, evidence be damned. Hey, if nothing else, we got to see China and the US go from passive agressive to openly pissy across the negotiating table, which is always fun. When the Chinese start referring to “a pig looking in a mirror” to describe the US’s inability to discuss its own failure to pass climate legislation, at least it is amusing . . .
But despite the (not-so) diplomatic fireworks and cheerleading the face of evidence, the oddest statement of the week comes from Greenpeace:
Greenpeace international climate policy director Wendel Trio criticized the hard-line stance of the major players in the talks. “Governments should look at what they can do for the climate, not what the process can do for them,” Trio said.
Look, I know that someone has to stand up for the ideal world we all wish we lived in, if only to remind us of what that ideal looks like when we get too far away, this statement is so staggeringly naive as to be unproductive. Of course governments will leverage the process for themselves – it’s what they do in international negotiations. This is reality – begging them to behave like something they are not isn’t going to change anything, and fails to engage with the process as it is in the world – in other words, how things really get done. A real effort to engage would have to address the staggering complexity of the diplomatic process, as well as the real self-interest of countries. I am friends with someone close to the biofuels negotiations that just took place in Rome, and the US Government side of that negotiation alone involved several executive branch agencies or offices, and there were major differences between them that took a lot of smoothing before anyone could go sit at a table in Rome . . . so that means that not only are we dealing with national interests, but within countries we are dealing with bureaucratic interests – which speak to the interests of the constituencies of the various bureaucracies.
I share the general stance of Greenpeace with regard to the need for climate action. However, their energy would be much better spent mobilizing all of the key actors along this legislative/diplomatic supply chain to understand why they care about the climate, and why it is in their interest/the agency’s or offices’ interest/the national interest to take action.
My father would have been appalled . . .
My dad was an attorney – general practice, and good at it. His principal client was the town of Londonderry, NH, where I grew up. He believed in the law as a tool to help people – he was the kind of lawyer who would sit with a client, listen to their case, and then honestly explain to them what they were likely to win, and what that win would likely cost in fees – even when the fees exceeded the likely award. Why would my father do this? Because the thought the courts were overused, and were not a place to settle petty fights when they might take away from the many more consequential issues passing through the court system.
Dad would have been utterly appalled by the behavior of Virginia Attorney General Ken Cuccinelli in his borderline censurable efforts to intimidate climate scientists (really a much wider attack on science in general – see RealClimate). While I have time and again argued for reasoned debate about the extent to which humans influence the climate, and the means by which they do so (yes, I personally think the data is clear that we do influence the climate in significant ways), Cuccinelli is not trying to get to any sort of truth that might further this debate. As there have been a lot of good, informative (if somewhat self-referencing) posts on Cuccinelli’s requests at sites like Climate Science Watch and Climate Progress, I won’t wade into the details of the inquiry or how it undermines academic freedom and the scientific process. Instead, I want to highlight one point, made by RealClimate, which captures why this whole inquiry is absurd, and why the Virginia Bar needs to intercede with someone who is abusing their office:
However, as appalling as this reasoning is, Cuccinelli’s latest request is simply bone-headed because the grant in question, entitled “Resolving the scale-wise sensitivities in the dynamical coupling between the climate and biosphere”, simply has nothing to do with the MBH98 and MBH99 papers! Even if one agreed with Cuccinelli about their quality (which we don’t), they are not referenced or mentioned even obliquely. The grant was to look at how climate variability impacted land-atmosphere fluxes of carbon, water and heat and doesn’t involve paleo-climate at all. So even if, for arguments sake, one accepted Cuccinelli’s definition of what constitutes ‘fraud’, nothing associated with this grant would qualify. We doubt there could be a clearer demonstration of the inappropriateness of Cuccinelli’s case….
That’s right, Cuccinelli is arguing that he has standing to run an inquiry into the results of two papers, which he argues are fraudulent, because the State of Virginia gave Michael Mann (the scientist in question) money to do ANOTHER STUDY whose outcomes are not questioned in the complaint.
I’m proud of my alma mater (U.Va.) for standing up to this absurdity.
I never found out what my father thought of climate change – he passed away in December 2002. But I do know he would have been disgusted by this case, and by the man wasting taxpayer dollars and time on a political fishing expedition.
Update: 10/11/2010
I had an email-exchange with Rick at Climate Science Watch, and he rightly pointed out that my offhand characterization of their reporting as “self-referencing” might be a bit unfair. CSW is an advocacy site that builds a case for its positions over time, across its reporting . . . so of course it will reference its own posts. And they are, it seems, a significant resource for people in the climate change community concerned with the politics of science these days. So, to be clear, my concern was more with the appearance of self-reference within a small number of blogs – something that is unavoidable, given the small number of good blogs that address this subject – not with the actual practice.
Wait, how did they come to this conclusion?
Remember the Flash Crash – the May 6 “unexplained” stock market dive? Well, the Securities and Exchange Commission and the Commodities Futures Trading Commission now say they have found the cause, and nobody did anything wrong to cause it. According to the NY Times, these commissions
“found no evidence of market manipulation. Instead, the temporary crash resulted from a confluence of forces after a single fund company tried to hedge its stock market investment position legitimately, albeit in an aggressive and abrupt manner” via NYTimes
This . . . is . . . insane. I mean, read the rest of the report, and this conclusion seems like an almost willful departure from reality. According to authorities, here is what happened:
- A single mutual fund, Waddell and Reed, decided to sell $4.1 billion in futures contracts. That’s a lot, but hey, it happens.
- The sale of these funds, however, is insane. To quote the Times, “The mutual fund started a program at about 2:32 p.m. on May 6 to sell $4.1 billion of futures contracts, using a computer sell algorithm that over the next 20 minutes dumped 75,000 contracts onto the market, even automatically accelerating its selling as prices plunged.”
In plain English, they decided to dump at all costs, without regard for losses or market impact. The firm claims it was dumping the contracts because it was concerned about the European financial crisis spreading to the US – they found themselves long on a lot of trades in the contracts in question, and decided to get out while they could in the face of what they expected would be a reversal in the contract values. OK, so maybe they got a bit jumpy . . . but the logic here comes apart when you look at the sale mechanism – they basically started dumping these contracts onto the market, creating an oversupply which would drive the contract price down . . . and they would keep pumping contracts into the market even as they exacerbated this problem. In other words, they tried to offload these contracts to avoid losses when their value dropped, but the way in which they offloaded the contracts ensured their value would drop. This is where the whole thing turns really nuts – they set up their sale algorithm to sell everything in 20 minutes. They dumped $4.1 BILLION DOLLARS OF CONTRACT ONTO THE MARKET IN 20 MINUTES! What the hell did they think would happen? Hell, the only rationalization I can come up with here is that they hoped to dump it all so fast that they would actually beat the market collapse they were likely to trigger.
You cannot tell me that the folks running this fund did not understand what this sale, executed in this manner, could do to markets. The justification of the sale structure is itself illogical on its face. And the fact that these guys still have jobs, and have not been beaten to death (metaphorically speaking) by other funds for what they did (like many of those who shorted the 2008 financial crisis) makes me really wonder what the hell went on here.
But the SEC and the CFTC have turned into Officer Barbrady from South Park: “Move along, nothing to see here”
Which reminds me of a classic South Park exchange (South Park, season 2, episode 2):
Mayor: Officer Barbrady, let’s pretend for one second that we had a competent law enforcer in this town. What would he do?
Officer Barbrady: Hmmm. That’s a good question, Mayor. Let me get right on that, with thinking.
Hang on, here we go!
Via Resilience Science:
International wheat prices are up 60-80% since July. And according to the Food and Agriculture Organization of the United Nations (FAO), this price increase is not a standard market function – despite some crop failures, “Global cereal supply and demand still appears sufficiently in balance” to have much more stable prices. So what, pray tell, is driving the increase? Well, the FAO blames “national policy responses and speculative behaviour.”
Garry at Resilience Science does a great job of covering the obvious rebuttal: “Oh, the FAO is another organization out to demonize markets – this argument isn’t based on evidence.” Um, not so fast . . . in a discussion paper for the International Food Policy Research Institute (IFPRI) – and by the way, the US is a major funder for IFPRI – Bryce Cooke and Miguel Robles appear to have demonstrated quantitatively that various proxies for speculation and activity on futures markets best explain the dramatic price rises for food in 2008. To quote:
“Overall, we conclude from our time series analysis that when taking the four commodities analyzed here there is evidence that financial activity in futures markets and/or speculation in these markets can help explain the behavior of these prices in recent years. Other explanations are only partially supported for the particular case of one agricultural commodity or not supported at all. We do not claim, however, that these other explanations should be disregarded; all that we can say is that in using the variables considered in this study and the particular time series models herein, we do not find such evidence.”
Well, looks like Frederick Kaufman (see this earlier post) was at least partially right . . . in this case, the futures markets are causing more problems than they are solving. Put another way, these studies demonstrate empirically that the manipulation of these markets is killing people – literally. This is not market failure, people. This is human moral failure. But we wouldn’t want to regulate those markets, now would we?
Sigh.
I'd be worried, but they're pretty much always wrong . . .
Well, the International Monetary Fund (IMF) says we are headed into an extended economic slump. AAAAAAAHHHHHHHHH!
Wait, don’t go all Glenn Beck, buying gold and arming yourself. The IMF has a staggering history of getting country-specific analyses completely wrong. From structural adjustment to currency stabilization, the IMF has packed quite a bit of failure into its (just over) sixty years of existence. They are better at the regional to global level, which is where their real purview is anyway.
The IMF was set up in the dying days of World War II to ensure global economic stability, which gave it a mandate at the global and regional levels. However, it really lacks a mandate at the national level (though it can influence the credit ratings of individual countries), and it shows in their often-faulty analysis . . . simply put, they don’t do fieldwork. They have absolutely no idea what is really happening in the countries they analyze and on which they pass judgement. So I tend to ignore their statements about individual countries.
I find it funny that the Telegraph’s article quotes Joseph Stiglitz on the likelihood of an economic “death spiral” in Europe. After all, Stiglitz has referred to the IMF as a bunch of third-rate economists from first-rate economics departments . . . in other words, the ones who couldn’t get jobs in finance. And look what the “good ones” got us into . . .
Which leads to another thought – how bad do the economists have to screw things up before people finally start doubting them as fonts of truth?