More on the Jevons' Paradox

From David Owen in The New Yorker back in December.  Subscription required, but you can read enough to get the gist of his thesis.

From Jevons himself in 1865,

“It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption.  The very contrary is the truth.”

Paul Romer on Charter Cities

Paul Romer is mentioned, prominently, in today's Wall Street Journal Review section piece on the "aerotropolis" ("Cities of the Sky", by Greg Lindsay).

Two notable quotes from near the end of the piece,

"If the 20th century was the era of nations, the 21st century is the era of cities."--South Korean President Lee Myung-bak

And the last sentence,

"[The aerotropolis] is at once a new model of urbanism and the newest weapon in the widening competition for wealth and security."

Question:  if we are going to organize our urban areas around transportation systems, why not mid-20th century technology (jet airplanes) rather than mid-19th century technology (railroads)?

Rubicon: A river in Wisconsin

Yes, it's true.  I'm a sucker for any reference to ancient Rome.  The Rubicon one is a cliche, but I do think that Charles Krauthammer has captured how monumental the events unfolding in our neighbor to the east will turn out to be.

I am buying into Walter Russell Mead's analysis that we (as a society) need to remake ourselves:  the status quo is unsustainable.  But to paraphrase another cliche, "après eux, puis ce?" (assuming my Google translator is working right).

Can't decide to tag this "Decline and Fall" or "Rebuilding from the bottom up".  I'm going with the former, as that is the order in which we must proceed.

America is Becoming Even More Suburban

Yes, your read that correctly.  Joel Kotkin has been digging into the just released data on the 2010 census and has found some interesting facts that fly in the face of conventional wisdom.

Joel contemplates the "Possible Long-term Implications",

"These shifts suggest that the Obama administration might want to rethink its high-density and urban-oriented strategy. Despite all the media focus on an imagined “back to the city” movement, Americans continue to disperse to “opportunity regions” and toward the suburbs."

(Via Forbes)

Unknown Unknowns and Unknown Knowns

, I've been giving a lot of thought lately to Black Swan Events (not the Natalie Portman movie).  Which got me thinking about the (in)famous Donald Rumsfeld quote from a 2002 Pentagon press conference.

Rumsfeld, Feb. 12 2002,

"Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones."

I remember seeing the press conference way back when and thinking, at the time, that Sec. Rumsfeld was making a profound point.  To this day, people make fun of the quote, as if it were some idiotic blathering.

In fact, it is the unknown unknowns that continue to roil the world.  I'll remember this quote, every morning, when I hear on the news that the latest unemployment figure, inflation number, GDP estimate, etc. was "unexpectedly" large, small, etc., compared against "analyst expectations".  If the analysts are always off, and always off in a single direction, then why don't they....oh, nevermind.

But what of the unspoken fourth category:  the unknown knowns:  those things that we are all well aware of, but won't acknowledge or admit to.  As I ponder recent events, I am thinking that it is from this fourth category that we have the most to fear.

Must Read: Peter J. Nelson's New Report on Energy

Peter J. Nelson has assembled a most excellent new report:  one that is a must read for anyone interested in energy policy in Minnesota.  The report, "Recommendations for Promoting Affordable and Competitive Energy Rates in Minnesota", is the latest entry in the Center of the American Experiment's Minnesota Policy Blueprint Series.  Peter is a Policy Fellow at the Center, and his report is well-researched and fully documented.  Set aside some time to read the whole thing.

The Still Elusive "Return to the City"

That's the headline for Wendell Cox's latest piece on the non-flight from the suburbs to the city.  We keep hearing about how empty- nesters and young adults are fleeing the suburbs for an exciting life in the big city.  Except that it's not happening and Wendell has the data to prove it.

The Jevons Paradox

The Jevons Paradox is the phenomenon described by English economist William Stanley Jevons.  Simply stated, if we learn how to use a resource more efficiently, it will lead to more use of that same resource, not less.  Jevons first described this phenomenon back in 1865.

The Scotsman newspaper has rediscovered the principle, in the modern "carbon footprint" controversy.

(Via Mark Steyn)

Joel Kotkin on Obama's Strange Obsession

I like trains as much as the next guy, but apparently not as much as President Obama.  Joel Kotkin chronicles the President's unhealthy obsession with "high speed rail".

Joel saves the best paragraph for last,

"In an era of tough budgets, and proposed cutbacks on basic services, setting sensible transportation priorities is crucial. Spending billions on a conveyance that will benefit a relative handful of people and places is not just illogical. It’s obscene."

(Via Forbes.com)

Walter Russell Mead on the Madison Uprising

Meaning no disrespect to the brave souls fighting for freedom and democracy in the Middle East and North Africa, but I agree with Walter Russell Mead:  the events in Madison, Wisconsin, this week could prove to be more pivotal to world history.

Lots of great passages, like this one,

"We should not be surprised that the battle is fierce, the tactics ruthless, the polarization intense: this is not just a struggle between interest groups, it is a conflict over basic ideas about how the world does or should work."

And this one,

"To put it in a nutshell, the only way forward for the United States is to unleash the full transformational power of information technology in the knowledge and service industries even if this entails (as it surely will) the destruction of the current institutional, bureaucratic and guild-based systems on which we currently rely."

Dr. Massoud Amin

Somehow, in the weeks this site has been up and running, I have neglected to include the great Massoud Amin in the pantheon of "People We Like."   Dr. Amin is an engineering professor at the University of Minnesota and inventor (as far as I am concerned) of the "Smart Grid" concept.  You will recognize him from the television commercials that the U has been running of late.

Massoud's U of M TV commercial:

O'Sullivan's First Law: An Eternal Truth

Writing in National Review more than 20 years ago, British conservative journalist John O'Sullivan proclaimed O'Sullivan's First Law:  "All organizations that are not actually right-wing will over time become left-wing."  In the years since I ran across this hypothesis, I have been unable to identify an exception.

In that same column from 1989, O'Sullivan offered a hypothesis to explain the behavior of right-wing organizations.  The hypothesis, which he attributed to British historian Robert Conquest, states, "The behavior of an organization can best be predicted by assuming it to be controlled by a secret cabal of its enemies."  This week, I am having a difficult time identifying an exception.

Walter Russell Mead on Ancient Greece

As part of his college course, Walter Russell Mead blogs about ancient Greece and what the lessons of the past hold for us today.

Link:  American Interest blog.

"The Luxury City" vs. Middle-Class Mobility

Also on New Geography, Joel Kotkin discusses the trend towards creating the "Luxury City" versus creating an incubator for upward mobility.  Joel told me last year that whatever candidate captures the message of how to bring opportunity for upward mobility to the middle and working classes will win the next Presidential election.  I'm still waiting.

Puncturing Suburban Myths

On New Geography, Wendell Cox is hard at work puncturing the myths promulgated against suburbia.

Charter Cities in Honduras?

In today's Wall Street Journal (web subscription required), Mary Anastasia O'Grady writes about Honduras' interest in establishing "Charter Cities" to promote free-market led growth in that Central American country.

The idea behind Charter Cities is to promote economic development by having a geographic area within a country where free market and free trade rules apply.  Living and working in such zones would be voluntary, and the idea is to find a way around the entrenched interests, monopolies, and stifling rules which suppress economic growth in the rest of the country, but which have their fierce defenders when reformers try to make wholesale changes.

I've wondered whether Detroit may be a candidate for this type of "model city" approach to (re-)developing the economy.  Like Fast Times' Jeff Spicoli (Sean Penn) once said,

"What Jefferson was saying was, Hey! You know, we left this England place 'cause it was bogus; so if we don't get some cool rules ourselves - pronto - we'll just be bogus too! Get it?"

Without having to undergo a revolution, or taking on the establishment, Charter Cities offer a way of hitting the reset button, a do-over, so that a place can have cool rules that encourage growth and development.

[Click on the Charter Cities link and read the story behind the students reading under the streetlight.]

Jefferson vs. Hamilton

Both Thomas Jefferson and Alexander Hamilton were great Americans.  But their contrasting visions for the new nation of America continue to influence our debates today.

Salena Zito writes in the Pittsburgh Tribune-Review about "Our New Jeffersonian Era."  I hope so.  For the past two years, as I travel around the state, I have been developing this theme of the need to move more toward the Jeffersonian view.  We are never going to bring back the yeoman farmers of the 18th century (nor should we).  But in the tug-of-war between Hamiltonian centralized, top-down, government by elites and the Jeffersonian decentralized, bottom up, government by the people, I vote for more of the former.

From Ms. Zito,

"Republicans were elected in November not because Americans love Republicans; they were elected because their values are in line with this new Jeffersonian era."

Paul Rahe on the Tea Party Phenomenon

Paul Rahe's article in Commentary magazine February issue provides a useful service by placing the Tea Party phenomenon in a historical context.  Professor Rahe is the author of (among other books) "Soft Despotism, Democracy's Drift: Montesquieu, Rousseau, Tocqueville, and the Modern Prospect".

Key quote:

"A government set at a considerable distance from the people over whom it rules is apt to become a despotism, for it is out of sight and out of mind, beyond reach and beyond control. This the Framers understood. They took heart, however, from the French philosopher’s [Montesquieu] suggestion that a federation of small republics could overcome this geographical imperative."

(Via Power Line)

Another Post About the Bakken Formation?

I know, I know, I sound like a broken record (for the kids:  an iPod stuck on "Replay").  But I can't resist news from America's oil patch.  Investor's Business Daily has the word on the latest production statistics.

(Via Instapundit)

Budget Deficits and the National Debt, Part 2

Not that I put much stock in their work, but here is PolitiFact's take on the issue.  They make a distinction between "gross debt" (which I list in Part 1) and "debt held by the public".  To me debt is debt.  Whether in the hands of the public, the Chinese, or the "lock-box", it will all have to be paid back someday.

Budget Deficits and the National Debt, Part 1

On a slightly different subject, all this talk about budget deficits at the state and federal levels jogged loose a thought that I have had for years, but cannot explain.

As in the debate on raising the Federal Debt ceiling, we speak of the national debt and the annual budget deficit, interchangeably, as is there is some connection between the two.  In my simple, primate brain I think there should be.  My training in introductory economics and accounting reinforces this brain-stem level reaction.

So explain this to me:  after years of those vaunted budget surpluses during the Clinton years, why did the total Federal debt never decline, not one year.  I recall reading about a panicked Federal Reserve, worried about how they would conduct monetary policy in a world with no federal borrowing.

Here is the data, all from the White House website in $Billions:

Year:      Surplus or Deficit (-)      Gross Debt at Year End
1997                  -72.8                          5,369.2                        
1998                   28.5                          5,478.2
1999                   70.6                          5,605.5
2000                 172.2                          5,628.7
2001                   25.3                          5,769.9
2002                -322.7                          6,198.4

With current debt levels at $14 trillion, clearly the growth in the debt slowed during the "surplus" years of the late 1990's.  But why did the debt not actually fall?  What am I missing?

Why do I care?  Well, if, in the unlikely event, we ever get the Federal Budget under control, we have an expectation the Federal Debt will also be addressed.  Perhaps not.

The Oil Revolution Spreads

The horizontal drilling technique which revolutionized the natural gas industry in North America and gave rise to the oil boom in the Bakken Formation (ND and MT) is spreading to oil patches in the rest of the continent.  Projections of 2 million barrels a day of production, if they come to pass, would rival the production from the Gulf of Mexico.  The AP is on the story.

(Via Instapundit)

Drilling Deeper on Complex Systems

In my last post, I linked to this Popular Mechanics article written in 2009 by the Instapundit himself, Glenn Reynolds. It plays into several themes I am developing.

It covers the "decline and fall theme", by referencing this book The Collapse of Complex Societies by Joseph Tainter.  Professor Tainter speculates that it was their increasing complexity that caused the collapse of the Roman and Mayan empires.

It covers "the energy debate" theme, by discussing the 2003 blackout in the Northeast, that started with one tree, one power line, and in seconds spread to 50 million people.

But most importantly, it develops the "rebuilding from the ground up" theme.  Professor Reynolds on what happens during a crisis,

"When individuals are prepared to look after themselves for a while, with food, water and medicine on hand, and alternative sources of heat or power, it makes a big difference.  The government can't take care of everybody at once.  If disaster-relief staffs don't have to worry about you, they can take care of others--which means that being self-reliant can actually help your community.

Often, government officials worry about the public panicking in a widespread disaster.  But they have that backwards.  In studies of more than 500 emergencies, the University of Delaware's Disaster Research Center found that panic rarely occurred.  In fact, people consistently jump in to help themselves and their neighbors."

Texas Rolling Blackouts: the Aftermath

The twin blackouts of electricity and natural gas that hit Texas and the desert Southwest last week are now moving into the next phase of the crisis:  investigation, as reported in today's Wall Street Journal. 

As always, suspicion falls first upon the market:  the electricity markets must be to blame for electricity shortages.  As with the California electricity crisis a decade ago (yes, the Enron debacle was that long ago) regulators are first looking to see whether suppliers withheld plants from the grid and natural gas from the pipelines to artificially induce shortages and increase prices for the few units remaining online.

The markets may well have been manipulated in this instance:  I have no direct knowledge of the situation.  But before we start assembling the firing squad, here are a few other points to ponder:

• It was cold there:  Texas set an all-time winter demand record for electricity.  (Temperatures fell to the single digits in places, in Texas!)
• It was cold there:  stuff doesn't work so well in the cold (or the heat).  I was involved in building a couple of natural gas, combustion turbine plants in Minnesota.  First, it can be hard to start those units in extreme cold.  This being Minnesota, we bought the "winterization" packages that were optional with the turbines.  I wonder how many Texas facilities skipped that box on the order sheet.
• "This is Texas, and down here, you're on your own."  Texas has its own power grid (ERCOT) which is separate from either the Eastern or Western grids.  Being isolated helps to protect you when something happens elsewhere.  But when the trouble is at home, then it's tougher to get help from your neighbors (who, like Mexico, were having their own problems at the time).
• Natural gas dependency.  More, even, than most regions, Texas is heavily dependent on natural gas as the "marginal fuel" for making electricity.  Following the latest fad, Texas utilities have cancelled a whole generation of coal-fired power plants.  I have cautioned Minnesota in moving the same direction, as events in the SW so vividly demonstrate. 
• Resilience engineering.  The Texas power pool thought that it had this huge reserve of power, but when problems in the natural gas system spilled over into the electricity sector, the failures began to cascade.  Complex, interdependent systems need extra attention from engineers to ensure that they can withstand such pressures.  (Hat tip to Instapundit, see Popular Mechanics at this link.)
• Finally, I am curious to know what role, if any, the state's wind power portfolio played.  Texas has the nations largest supply of wind turbines and it would be interesting to know whether the fleet helped or hurt the situation.

Central Planning and the Natural Gas Shale "Revolution"

In Saturday's Wall Street Journal, Holman Jenkins has a column on the under reported revolution in natural gas from shale formations.

Just a couple of years ago, we were spending billions in North America to increase our ability to import natural gas via tanker ship from overseas, reflecting the poor prospects for domestic production.  Now we are talking, seriously, about the prospects for exporting natural gas to Asia.

As Jenkins points out, none of this success was the result of planning or deliberate policy:  it was the market working at its best.  One of the reasons for this quiet revolution is the simple fact of geography:  many of the finds are in the East and Midwest, where the land is in private hands, rather than the West, where the federal government is the principal landowner.

The key paragraph in Jenkins' piece is the last one:

"The shale gas revolution has been a surprise, in a sector where surprises are still permitted.  Nobody "planned" it.  There's a lesson here for every kind of reformer:  Often the only plan needed is a plan to remove obstacles to innovation."

Press Release from Rural Caucus on My Speech

I've uploaded the press release from the MN Legislature's Rural Caucus on my speech to the group yesterday.  Thanks to Mary Franson and Tom Hackbarth for the kind words.

Flashback: Past and Future Energy Czars Debate

Back in September 2009, in what may be a preview of changes in state energy policy, the TwinWest Chamber of Commerce hosted a debate between your humble blogger and the man soon to take over state energy policy:  Bill Grant. 

Don't Just Cut Government, Reinvent It

Louis Gerstner, former head of IBM, has a useful column in yesterday's Wall Street Journal on reinventing government.  We do need to cut and cut first, I maintain, but Mr. Gerstner makes three useful points, with which I agree:

• Don't cut across the board--some items may need to be held steady, others actually increased, as we readjust priorities.
• Focus on programs--nothing so permanent as a government program
• No exceptions--no sacred cows

Minnesota House Committee Votes to Overturn Coal Power Ban

The House Environment and Energy Committee voted today to overturn Minnesota's ban on building or importing new coal power from out of state.  What I found gratifying, beyond the 11-6 vote, was the actual debate that the committee had on energy.