This article in the excellent microeconomic insights website summarizes in relatively simple language a recently published economics paper about the difficulties of regulating greenhouse gas emissions via market-based regional policies.
For anyone who wonders why I emphasized the environment
I just wrote a post with emphasis on the environment, not necessarily what people might have expected on the day after the momentous US election. Here is why:
I have no children of my own but I do love dearly a number of young people and generally feel for the plight of the young and the unborn to whom we leave this mess. Quite apart from the economic disaster that this election result is likely to produce, it does set back the recent world-wide progress on the environment, small and halting as it has been, and I find this casts a huge dark cloud over my thoughts.
Difficult problems in mechanism design that are too important to get wrong
This article by Jonathan Rauch in the Atlantic about the disintegration and paralysis of American politics, got me thinking again about how important and maddeningly difficult the problem of mechanism design is.
Don’t run away! It’s simple enough to explain what mechanism design is, even if it is hard to do it well. Mechanism design is the study of how to create rules for important human interactions that will guide the outcomes of such interactions toward desirable ends, when the people interacting follow their own perceived self-interest.
For situations in which coalition-building is not to be expected, the progress mechanism designers have made over the last few decades is palpable and has achieved results. Auctions for airwaves have raised billions of dollars of revenue; kidney exchanges have saved hundreds of lives; doctors in training are better allocated to hospitals and students to colleges and graduate programs — these are just some of the examples of cases where mechanism design had a big impact.
Politics is a quintessential realm of coalition-building. But the brand of game theory that underlies the very same mechanism design approach that has achieved the great results I just mentioned fails to model coalition-building successfully. It may be that problems like fixing US politics are inherently intractable, but it seems that the US Constitution was an inspired solution that did reasonably well for a long time, even as it is beginning to fail now.
Related to the general problem of designing well-functioning democratic political systems, we have the even harder problem of getting disparate political systems to deal with the mounting disaster of planetary environmental degradation, which threatens the entire human species (and a whole lot of other species). Mechanism design theorists simply seem incapable of modeling well such a huge problem of coalition formation. Lest you think I am just criticizing others, I count myself as one of the theorists incapable of envisioning a good approach at this time.
We have evidence, in the works of Elinor Ostrom and subsequent literature inspired by Ostrom’s work, that local solutions to the problem of the commons often develop over time and such solutions, which take the form of formal and informal rules of the game (mechanisms!), often work well to solve local pollution or resource overuse problems.
The hard problem is to develop such solutions for state-wide problems (US politics is an example) and planet-wide problems (the environment), before they destroy any semblance of civilization and the livability of planet Earth. I know there are many brilliant minds working in mechanism design, much more brilliant than mine. I hope I see progress made in modeling coalition formation and its implication for mechanisms in the coming few years, before it is too late.
Good essay on the climate change challenge
I am on a train so I have to use my iPhone to write this, so I am keeping it short: read this, please! https://medium.com/newco/the-shot-clock-d42255bc7bbd?source=linkShare-106c32e19049-1462391578
Are we any better than Nazis in the face of environmental catastrophe?
Yesterday I read a long article by the historian Timothy Snyder that is still rumbling around in my head. Granted, the article was published a few months ago, but it was new to me yesterday.
The premise is that we are not so far from living in Hitler’s world as we may think, we in the Western democracies. The environment is getting steadily worse, the economy is getting steadily more unkind to the non-rich, and easy, populist explanations blaming the Other are appealing to more and more people.
I highly recommend the essay by Snyder. Further, it taught me something that surprised me: Hitler accomplished most of his genocidal “achievements” in areas where he managed to destroy state institutions that supported some sort of rule of law. Destroying the center of authority does not create the conditions for a new democracy to flourish; witness what the US has done to Iraq. As I am thinking hard about the importance of social norms and social cooperation as the foundation for any sort of human welfare and prosperity, this struck me hard, especially as the frontrunner of the GOP presidential nomination gives every indication that he would relish smashing democratic institutions that stand in his way, to the extent his popular support allows.
Logician Kurt Gödel, famously, had serious reservations about taking the oath of US citizenship, because he saw how the US constitution does not preclude the establishment of a Hitler-style dictatorship. His buddies Albert Einstein and Oskar Morgenstern convinced him to not make a big fuss about it in front of the judge, so Gödel became a US citizen. Whether this story is correct or a little overblown, it seems to me Gödels’ worry cannot be breezily dismissed, especially in a world in which the threat of environmental catastrophe will tempt people to fight for resources, potentially killing billions, instead of reaching for scientific solutions. Snyder’s discussion poignantly points out that, while Hitler worried about feeding the German Volk, which needed Lebensraum to grow and prosper, he totally missed that the Green Revolution, already partially started with the efforts of German scientists, would in short order feed a growing human population without strain, and without the need for the kind of universal war Hitler started.
Carbon tax: a good idea
Don’t take it from me. Take it from conservatives, in British Columbia, Canada. Here’s Eduardo Porter on this, in the New York Times.
Lead exposure in Philadelphia and other cities in Pennsylvania
This article on Vox is really depressing.
Happy New Year, little blue marble
What better date than January 1st to share a photo that NASA recently released of our little blue marble we call Earth?
A good Q&A on climate change
The New York Times has a concise question and answer article on climate change, as the Paris conference on the climate crisis is about to begin. I recommend that everyone reads it and does something to press their government to work towards a good global agreement on mitigating the unfolding train wreck of the Earth’s environment. What homo sapiens needs right now is to show some communal sapience and find policies that will work effectively to prevent the threat to the very survival of humans that human-caused climate change threatens us all with.
Economists have said many times that steps such as establishing a price for carbon and a way to quantify the value of natural capital available to humans are our best hopes for mitigating the disaster. Even as the conference in Paris is unlikely to agree on such terms, I sincerely hope to see at least some pledges for cutting emissions coming from the worst offenders, such as the U.S., China, India, and a few other countries.
The environment, famine, and terrorism—things are going to get worse before (if) they get better
Water and food scarcity in the Middle East have caused massive problems that are only going to get worse. Defeating Da’esh militarily is only a little bit of the difficulties humanity faces. Long, depressing, persuasive essay by Yonatan Zunger on Google+: https://plus.google.com/u/0/+YonatanZunger/posts/RN2yx54bxPa