Is Nuclear Power Safe?

"This kind of argument can be applied to almost anything, since nothing is literally 100% safe. It has been used against medicines, pesticides, nuclear power, automobiles, and many other targets. Where the issue is the safety of nuclear power plants, for example, the answer to the question whether nuclear power is safe is obviously No. If nuclear power were safe, it would be the only safe thing on the face of the earth. This page that you are reading isn't safe. It can catch fire, which can spread and burn down your home, with you in it. The only meaningful question, to those who are spending their own money to deal with their own risks, is whether it is worth what it would cost to fireproof every page in every book, magazine, or newspaper.

In the case of nuclear power, the question of safety, in addition to cost, is Compared to what? Compared to generating electricity with hydroelectric dams or the burning of fossil fuels or compared to reducing our use of electricity with dimmer lights or foregoing the use of many things that are run by electricity and taking our chances on alternative power sources? Once the discussion changes to a discussion of incremental trade-offs, then nuclear power becomes one of the safest options. But neither it nor anything else is categorically safe."

--Thomas Sowell, Applied Economics: Thinking Beyond Stage One 

Why Chickens Will Never Go Extinct

"Leaving property rights undefined is even more disastrous than imperfectly defining them. Wild animals are often hunted to extinction precisely because they do not belong to anyone. They can by fiat or by metaphor be said to belong to 'the people,' but unless it is feasible to apply force to exclude poachers, there is no property right in reality. It is precisely those things which belong to 'the people' which have historically been despoiled--wild creatures, the air, and waterways being notable examples. This goes to the heart of why property rights are socially important in the first place. Property rights means self-interested monitors. No owned creatures are in danger of extinction. No owned forests are in danger of being leveled. No one kills the goose that lays the golden eggs when it is his goose. Even chickens who lay ordinary eggs are in no danger of being killed before their replacements have been provided. No logging company is going to let its own forest become a mass of stumps, though it may do that on 'public' land."

--Thomas Sowell, Knowledge and Decisions 

Who Said Economics was Dismal?

Saw this on a friend's Facebook wall and got a laugh. It's an economics joke. The man on the right appears to be the Austrian economist Ludwig Von Mises, who was a dire opponent of John Maynard Keynes, hence his jibe and laughter.

How to Help the Poor without Buying Fair Trade Coffee

As promised, here is economist and Christian Victor Claar's answer to that question:

"Tim Harford echoes Collier, observing that coffee farmers will never be rich until everyone else is first; that is, until coffee growing becomes rare enough that it can command a higher price. Because fair trade creates more coffee, and not less, coffee will never pay well. Thus, only long-term growth and development will help the poor grow rich. 

What, then, can lead to real and lasting economic gains for the poor? The good news is that we have considerable information about this question, and a rich feast of evidence confirming the answer that economics provides. When prices are free to act as a signal showing people what to make either more or less of, poor people begin to flourish. For example, even though there continues to be income inequality within nations, inequality across the entire globe has decreased over the last quarter century. More importantly, the rate of extreme poverty has declined. Columbia University’s Xavier Sala-i-Martin estimates that between 1976 and 1998, the number of people living on one dollar or less per day fell by 235 million. Further, the number living on two dollars or less per day fell by 450 million. That is improvement worthy of our rejoicing! 

How does it happen? Why has it happened so quickly in China and India, while much of Africa has grown slightly poorer over the same period, even as we have given massive amounts of foreign aid to Africa? Simply put, in places where markets operate freely, prices act as a signal—to all of us—to stop doing things that pay little and begin doing things that pay more. In the case of the coffee market, the reason that coffee continues to be cheap is that we keep making too much because we choose to ignore the price signal.

Putting at least some faith in markets to be a powerful force for change in the lives of the poor does not amount abdicating our concern for the poor, instead opting to cavalierly put our hope in little more than faeries and magic dust. Just as we trust gravity to keeps us all affixed securely to the ground, and just as principles of particle physics assure you that the chair you are sitting in right now will not let you slip through its seat to the floor, markets work invisibly in ways that we understand reasonably well. Although this author is no physicist, he trusts what a physicist tells him regarding what can and cannot work in our physical world, though the forces themselves cannot be easily observed; we see only the effects of such forces. 

The laws of physics are part of God’s providence; so are the laws of economics. In fact, many Christian economists have seen the providence of God in Adam Smith’s famous invisible hand of the marketplace. Two quotes wonderfully and beautifully illustrate. Consider first the words of Robin Klay and John Lunn, two economics professors from Hope College in Holland, Michigan:

Just as God-given productivity of the soil, combined with human labor and ingenuity, blesses societies with abundant crops, so also does the productivity of gifted human beings bless all humanity through markets. The somewhat mysterious way in which markets accomplish this without any one person directing it suggests to us the providential hand of God at work. 

More recently, in a book reflecting on John Calvin’s thought regarding markets, David Hall and Matthew Burton write: 

'God’s providence is present in all events. We need to learn to see his “invisible hand” working in all things. He is truly sovereign over all of history. To doubt that is to reject God’s lordship. Such repudiation is not merely based on an absence of information; it is also a rebellion of the heart against one’s Creator. Happy is the person who learns to see God’s hand in all of life.'

A key role for concerned Christians, then, is to permit and even encourage the power of markets to do the heavy lifting of the poor from poverty. One encouraging tool that is already making a difference in the lives of poor coffee and soybean growers is the Internet and mobile phone access. For years, coffee sellers everywhere and soybean growers in India have fallen victim to greedy middlemen by settling for a selling price that is below the going rate simply because growers did not have access to potential buyers other than their local coyote and also because they lacked accurate information regarding the going market value of their crops."

--Victor Claar, Fair Trade? Its Prospects as a Poverty Solution

Does Buying Fair Trade Coffee Help the Poor?

Victor Claar, an economist and a Christian, answers this question.

"The modern fair trade movement has marvelous intentions. This author has dear friends who are also dedicated brothers and sisters in the faith who believe they are saving the world by purchasing Equal Exchange’s coffees and chocolate or by staffing the Equal Exchange coffee concession between church services. They carry out those duties with joy, love, good humor, and the belief that they are agents for change acting on behalf of the “least of these.” 

Yet, the fair trade movement, for all its good intentions, cannot deliver on what it promises. Simply put, coffee growers are poor because there is too much coffee. Fair trade simply does not address that fundamental reality. In fact, by guaranteeing a price to growers that is higher than the world price of coffee, fair trade makes the supply of coffee even larger than it would otherwise be. As we have already seen, whenever coffee prices increase, there will be another coffee grower, and another, and another...

Despite its marvelous intentions, as well as the good-faith monetary contributions that consumers make when they choose higher-priced fair trade coffee over other coffee, fair trade will never lead to the long-term enrichment of the poor. Instead, it creates an additional incentive for the poor to continue to soldier on in a line of work that will never pay much better than it does right now. As long as coffee prices remain low, growing coffee—even if it is fair trade coffee—will not pay well. The reason that coffee prices remain low is because there is too much of it. The fair trade movement does no favors for the poor by encouraging even more poor people to grow even more coffee, but that is precisely the effect that a higher fair trade price is having, leading to the FLO’s reluctance to take on any more cooperatives.

Low coffee prices, like low prices for any other commodity, normally are a signal to producers to make less of it and move onto something else instead. fair trade frustrates this signal, with unfortunate consequences. First, fair trade encourages even more coffee production. Second, fair trade makes non-fair trade growers poorer because non-fair trade prices fall as new growers in places such as Vietnam are attracted into the market by artificially high prices. Entry by new growers increases the supply, and bigger supplies of anything drive prices downward.

(Tomorrow, I will share Claar's answer to the question "If fair trade won't help, what will?")

--Victor Claar, Fair Trade? Its Prospects as a Poverty Solution

 http://www.amazon.com/Trade-Prospects-Poverty-Solution-ebook/dp/B007411ADE/ref=ntt_at_ep_dpt_1

An Amazing Invention that Will Lift Millions Out of Poverty

“Imagine a spectacular invention: a machine that can convert corn into stereo equipment. When running at full capacity, this machine can turn fifty bushels of corn into a CD player. Or with one switch of the dial, it will convert 1500 bushels of soybeans into a four-door sedan. But this machine is even more versatile than that; when properly programmed, it can turn Windows software into the finest French wines. Or a Boeing 747 into enough fresh fruits and vegetables to feed a city for months. Indeed, the most amazing thing about this invention is that it can be set up anywhere in the world and programmed to turn whatever is grown or produced there into things that are usually much usually much harder to come by.

Remarkably, it works for poor countries, too. Developing nations can pout the things they manage to produce—commodities, cheap textiles, basic manufactured goods—into the machine and obtain goods that might otherwise be denied them: food medicine, more advanced manufactured goods. Obviously, poor countries that have access to this machine would grow faster than countries that did not. We would expect that making this machine accessible to poor countries would be part of our strategy for lifting billions of people around the globe out of dire poverty.

Amazingly, this invention already exists. It is called trade.”

--Charles Wheelan, Naked Economics

Why Do People Kill Black Rhinos?

“The black rhinoceros is one of the most endangered species on the planet. Fewer than 2,500 of them roam southern Africa, down from about 65,000 in 1970. This is an ecological disaster in the making. It is also a situation in which basic economics can tell us why the species is in such trouble—and perhaps even what we can do about it.

Why do people kill black rhinoceroses? For the same reason they sell drugs and cheat on their taxes. Because they can make a lot of money relative to the risk of getting caught. In many Asian countries, the horn of the black rhino is believed to be a powerful aphrodisiac and fever reducer. It is also used to make handles on traditional Yemenese daggers. As a result, a single rhino horn can fetch $30,000 on the black market—a princely sum in countries where per capita income is around $1,000 a year and falling. In other words, the black rhino is worth far more dead than alive to the people of impoverished southern Africa.

Sadly, this is a market that does not naturally correct itself. Unlike automobiles or personal computers, firms can’t produce new black rhinos as they see the supply dwindling. Indeed, quite the opposite force is at work; as the black rhino becomes more and more imperiled, the black market price for rhino horns rises, providing poachers even more incentive to hunt down the remaining animals. This vicious circle is compounded by another aspect of the situation that is common to many environmental challenges: Most black rhinos are communal property rather than private property. That may sound wonderful. In fact, it creates more conservation problems than it solves. Imagine that all the black rhinos were in the hands of a single avaricious rancher who had no qualms about making rhino horns into Yemenese daggers. This rancher has not a single environmental bone in his body. Indeed, he is so mean and selfish that sometimes he kicks his dog just because it gives him utility. Would this ogre of a rhino rancher have let his herd fall from 65,000 to 2,500 in thirty years? Never. He would have bred and protected the animals so that he would always have a large supply of horns to ship off to market.—much as cattle ranchers manage their herds. This has nothing to do with altruism; it has everything to do with maximizing the value of a scarce resource.”

--Charles Wheelan, The Naked Economist (2002 A.D.)

Parenting, War, and Economics

This comes from a fascinating book on just-war theory entitled War, Peace, and Christianity:Questions and Answers from a Just-War Perspective. The authors organize the book around 104 questions about just-war from the perspectives of history, theology, philosophy, and the experience of combatants and non-combatants. This question deals with whether or not the threat of war or military-preparedness can actually deter war. What I found fascinating was how they talked about economists, parents, and human nature.

Q 85: Does deterrence work?

At the academic level, this is a question that generates no little controversy and disagreement. At the practical level, by comparison, the matter of deterrence is relatively noncontroversial. The reason for this discrepancy would seem to have more to do with one's assumptions about human nature than with war and peace per se. If you talk to social scientists, for example, you'll find that most, though by no means all, of them believe that deterrence has little effect on human behavior. And there is a reason for this conclusion. Those who are skeptical generally have a more secular and optimistic understanding of human nature: humans, it is generally believed, are basically good rather than inherently flawed. As a corollary of that view, punishment is thought to be injurious to a person's psyche.  

Most economists, by contrast, answer the question 'Does deterrence work?' in the affirmative. They observe the wide range of human activity in the realm of economics, business, and finance. Here, alas, humans are remarkably predictable and act accordingly. When handling money, material goods, and services, they operate as if there is some law--or cluster of laws--that directs them. While economists are not necessarily more religious than social scientists, their view of human nature is much more inclined to a moral realism with regard to human behavioral patterns. In their projection of future market trends, coupled with their estimation of human psychology and behavior motivation, they are characterized by a realistic understanding of human behavior...

Does punishment deter? While many social scientists are inclined to say it does not, most parents, regardless of religious belief, will say without hesitation that it does deter. In fact, in all likelihood they will automatically attempt to implement 'the law of deterrence' with their own children, whether consciously or unconsciously. As seen through the lens of parental control, the only case in which punishment--that is, pain or deprivation--does not deter is the child who has never known moral restrictions. For that individual, few things in this life will inhibit evildoing. And, of course, that child will end up being a 'menace to society,' and society will need protection from that individual...

The difference between a social scientist's understanding of human nature and that of the economist might be summarized as follows: the latter is guided by a moral realism, while the former operates on the assumption of moral positivism. It is noteworthy that most--though certainly not all--parents tend, at least in their own homes, to be 'economists' and not 'social scientists.' The same can be said for law-enforcement officers, and for good reasons."

--J. Daryl Charles and Timothy J. Demy, War, Peace, and Christianity:Questions and Answers from a Just-War Perspective, http://www.amazon.com/War-Peace-Christianity-Questions-Perspective/dp/1433513838/ref=sr_1_1?s=books&ie=UTF8&qid=1327115234&sr=1-1

Does Recycling Really Save Trees?

Not according to an article from the Encyclopedia of Economics and Liberty.

"Ironically, recycling does not eliminate environmental worries. Recycling is a manufacturing process and, like other manufacturing processes, can produce pollution. An EPA study of toxic chemicals found such chemicals in both recycling and virgin paper processing, and for most of the toxins studied, the recycling process had higher levels than the virgin manufacturing did. Nor will recycling more newspapers necessarily preserve trees, because many trees are grown specifically to be made into paper. A study prepared for the environmental think tank Resources for the Future estimated that if paper recycling reached high levels, demand for virgin paper would fall. As a result, writes economist A. Clark Wiseman, “some lands now being used to grow trees will be put to other uses.” The impact would not be large, but it would be the opposite of what most people expect—there would be fewer trees, not more. Finally, curbside recycling programs require additional trucks, which use more energy and create more pollution."

--Jane Shaw, "Recycling," from Encyclopedia of Economics and Liberty, http://www.econlib.org/library/Enc/Recycling.html

(p.s. If you read the entire article, you'll find that she is not against all recycling. But like a true economist, she looks at the hidden costs, not just the obvious monetary costs.)