23 May 2018

Links of interest

  1. The Water Atlas (to which I contributed one map) is now available for free download!
  2. Don't interview for the job, audition. Related: Avoid bullshit jobs.
  3. More good advice on eating right
  4. "How to kill a fish" changed my mind
  5. A ridiculous example of astroturfing in New Orleans: Actors protesting renewables and favoring natural gas
  6. Small communities are dying in America's "fly over states" as diversified family farms turn into corporate monocultures that don't need people. This is the result of 100 years of chasing yield over profitability.
  7. More insights into Facebook's effect on people (cognitive dissonance), business model (it will continue to manipulate you as long as it's profitable) and the open-internet that works for us. This quote from the second is worth emphasizing:
    You basically are driven to the outrage cycle at a personalized level. They’re basically trying to trigger fear and anger to get the outrage cycle going, because outrage is what makes you be more deeply engaged. You spend more time on the site and you share more stuff. Therefore, you’re going to be exposed to more ads and that makes you more valuable.
  8. What a woman can do when she's rich enough to ignore social norms.
  9. An update on the politics of the Nile (and Ethiopia's dam)
  10. Your (?) data? "Let’s not rush to sacrifice the personal at the altar of the collective" plus "I never tell stores who I am. I never let them know. I pay cash and only cash for that reason."

22 May 2018

Capitalism has the answer, but what's the question?

In an interview given for the catalogue for "After the End of the World" (an exploration of the elements and impacts of climate change that I saw a few months ago in Barcelona), Kim Stanley Robinson, a successful science fiction writer, reflects on the "political economy of the Anthropocene":
This is what bothers me in economics: its blind adherence to the capitalist movement even when it is so destructive. Enormous amounts of intellectual energy are going into the pseudo-quantitative legal analysis of an already existing system that's destructive. Well, this is not good enough anymore because it's wrecking the biophysical infrastructure.
As an environmental economist, I am familiar with this critique as well as its weaknesses.

First, you have Robinson's misunderstanding of capitalism, defined as "an economic system based upon private ownership of the means of production and their operation for profit." As you can see in this definition, capitalism is about ownership and profit -- in contrast to other systems (communism) where ownership rests with the state or collective or profits are not the goal.

Second, "means of production" almost always means physical, human and intellectual capital, i.e., factories, institutions and ideas. Although it's possible to include natural capital (ecosystems) in this definition as a means of including discussions over its depletion, such an extension would be a mistake, as natural capital is a collective good that cannot be managed or controlled by private individuals.

Third, a capitalist system, like all economic systems, is embedded in the political system where collective decisions are made about how the market should interact with non-market aspects of life. My tweet from a few months ago captures the reality:
Nature doesn’t need us. We need nature.
Fourth (and finally), we can therefore see how capitalism will help or harm ecosystems in exactly the way that "society" decides. That's why, for example, some countries have useful regulations regarding pollution while others have counterproductive policies to subsidize fossil fuels. It is this distinction (as well as the impressive way that capitalism "solves" problems to make profits) that Robinson misses.

Bottom line: Capitalism is not the driver of the Anthropocene as much as political and social decisions to ignore the costs of private consumption on ecosystems and other communal assets. We can have "sustainable capitalism" today by imposing the social as well as private costs of private consumption on individual consumers and capitalist producers.

21 May 2018

How are workers different for beggars?

Orwell's very enjoyable Down and Out in Paris and London, which is free to read online (or download), says:
Why are beggars despised? — for they are despised, universally. I believe it is for the simple reason that they fail to earn a decent living. In practice nobody cares whether work is useful or useless, productive or parasitic; the sole thing demanded is that it shall be profitable. In all the modem talk about energy, efficiency, social service and the rest of it, what meaning is there except ‘Get money, get it legally, and get a lot of it’? Money has become the grand test of virtue. By this test beggars fail, and for this they are despised. If one could earn even ten pounds a week at begging, it would become a respectable profession immediately. A beggar, looked at realistically, is simply a businessman, getting his living, like other businessmen, in the way that comes to hand. He has not, more than most modem people, sold his honour; he has merely made the mistake of choosing a trade at which it is impossible to grow rich.

18 May 2018

Friday party!

MDMA in wastewater indicates where use (per capita) is higher:
That big circle is centered on Amsterdam ;)
Go here for data on other drugs in EU wastewater.

17 May 2018

Gas leaks are bad news for efforts to reduce GHG emissions

I learned about the problem of unmeasured leaks magnifying the negative impacts of natural gas a few years ago. This 2013 article explains the problem:
The gulf between the official numbers and the Cornell estimates wasn’t a surprise to some. John Bosch oversaw emissions estimates for the EPA for more than 30 years before retiring in 2009. Emissions estimates were based on voluntary participation from industry, and only companies with good leak management programs volunteered. “My experience is that when regulators start looking at actual emissions the figure can easily double,” says Bosch. In fact, when real measurements are taken, the difference sometimes turns out to be even greater than that. In 1988, one oil refinery in Sweden recorded gas emissions that were 20 times higher than official estimates for the same facility. More recent data from natural gas processing plants in Canada put emissions at between four and eight times official levels.

War is hell

My friend Maranie is not one for public speaking, but she is compelled to speak out about the death and misery of war that she has witnessed as a photographer in the Middle East. Watch her talk (and look at her photos) to decide if the US should be "liberating" people.

16 May 2018

Links of interest

  1. Is that decision reversible? Then go for it.
  2. The tragedy of Kabul
  3. A physicist on publishing paralysis on the theoretical margins
  4. The creator of pop-up ads on why ad-driven platforms are anti-user
  5. A short overview of Russia's propaganda machine, from some experts
  6. "The Internet Apologizes" is a fascinating series of interviews with tech pioneers talking about how social media has turned against our common good. This summary article matches quotes with topics, but I prefer to read the full interviews (see sidebar at site)
  7. How to delete accounts on the internet (time to clean up your digital debris?)
  8. The West shouldn't rule the world, but its institutions have helped humanity
  9. Maybe we need more conspiracies?
  10. Brexit: Britain's nervous breakdown and the parallels with the US.
H/T to BZ

15 May 2018

Is the art market driven by financial or social value?

Filippo writes:*

The art market exposes astonishing results, highlighted by the astounding $60 billion annual turnover of this marketplace.

The art market is highly specialized due to a broad range of choices, defined as different art movements which are comprised of modern art, contemporary art or expressionism, which are further specialized into sub-components. For example, in modern art, we can consider the Dadaist movement, fauvism, neo-expressionism, cubism, pop art, and surrealism.

This important variety contributes to general important returns, in terms of utility. Here utility is enhanced by an additional value, the aesthetic worth of a painting. Furthermore, the important specialization of the art market may offer many openings to buy artwork due to its consideration as an investment asset, reinforced by the expected gains of an estimated inflation in the art market. However, this type of investment market withholds an important risk [pdf], such as a devaluation of an acquired art work diminishing a prospective gain when reselling the investment asset.

Not to mention, information plays an essential role into forming the subjective models influencing investment [pdf] into an artwork. In other words, the incomplete information that the buyer has will influence his decision. For example, there is the risk that the purchased artwork will see its value increase, or a decreasing appraisal. Another feature can be a personal overestimation of an artwork due to incomplete or a lack of information, poorly and subjectively derived models or the only consideration of aesthetic returns [pdf]. Therefore, the buyer will face the risk of overpaying for an artwork which complicates the process of realizing a gain. This lack of information entails an important uncertainty in this market.

Consequently, the actors will try to compensate this lack of knowledge, or human capital within this market, with the social information exchanged in the art market. Here, social information is considered as information or signals derived from other actors’ economic actions, like ownership, buying, investing. These actors are termed as respected artistic institutions, for example world-famous museums, important collectors, esteemed galleries or significant art dealers.

For example, past ownership may play an important role in market valuation exemplified by the important raise of Basquiat’s work appraisal. Coincidentally, certain Basquiat’s oeuvres are owned by important Chief Executive Officers of important firms, namely Bernard Arnault, the CEO of Louis Vuitton Mo√ęt Hennessy Group. Moreover, the inclusion of certain works of art in important cultural institutions, like the MoMA or the Guggenheim museums, may increase the overall recognition of the value of an artist’s work which may inflate the perceived market value and price.

Nevertheless, the art market and art are usually connected with high society [pdf]. Especially if we base ourselves on the historical development of this discussed marketplace. Considering that one of the most important auction houses, Christie’s, started to develop thanks to artworks, which were mostly supplied by aristocrats. Coupled with an assumption, entrenched back in history, that these works of art have also been sold to wealthy people since most of the people within this social stratum beneficiated from an important disposable income [pdf]. For example, when Christie’s was settled, in the eighteenth century, the clients were aristocrats or individuals belonging to a wealthy social stratum, exemplified by the first important sale this auction house has experienced, which involved Catherine the Great of Russia. In other words, the consumption of an artwork can be identified as the consumption of a positional good, which signifies that buying an artwork would position the buyer into a specific social stratum.

Following, the possession of an artwork can also imply a certain societal value. Buying an artwork would signify showing a certain wealth which signifies that the artwork may be linked with the Veblen effect. Consequently, the Veblen effect implies a higher derived utility from owning expensive artwork following a belief that it signifies a higher position in the social hierarchy but most importantly, that this effect may signify that a more expensive artwork has more value. This increases the utility raised from the act of buying a more expensive artwork. However, this also increases the risk of creating a bubble in which the present actors would all try to buy the same artwork. Exemplified by the value of Jean-Michel Basquiat’s oeuvres, which increased in value due to an overall preference for his artworks.

Bottom line: Uncertainty in the art market is driven by incomplete models of value. The uninformed majority of actors in this market will try to compensate their decision-making representations. However, due to high cost to acquire more information, and embedded important transaction costs of this market, the actors will use the essential, available ‘social information’. This ‘social information’ is however withheld by the elite of this market, like important collectors or respected institutions. Therefore, the art market is a market with very high entry barriers.

* Please help my growth and development economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)

Asparagus production and water security in Peru

Darian writes:*

The blood of traditional small/medium scale farmers is on the hands of big agribusiness managers in Ica. Peru’s non-traditional agricultural sector and its export boom - with focus on asparagus - after its neoliberal reform, is a relevant topic under the framework of growth and development. Whilst the asparagus industry is a key contributor to Peru’s economic continuous growth, it comes at the social cost of water shortage in Ica where the irrigation systems dry out the groundwater. As the Peruvian government fails to adjust for the negative externality, marginalised traditional rural farmers carry the social costs as they are deprived of their water supply.

The foundation of Peru’s agricultural export boom was set in 1990 when freshly elected authoritarian rightwing President Alberto Fujimori began his structural neoliberal reforms. These reforms included the removal of land ownership restrictions, cheap land prices and tax incentives, which encouraged big businesses to expand their agricultural production, as well as Foreign Direct Investment (FDI). In addition, in 1991 Peru agreed to the US’s ‘Andean Trade Promotion and Drug Eradication Act (ATPDEA)’ [pdf], which opened the US market for Peruvian agriculture by lowering trade barriers. As the name suggests, the act was a strategic move in war on drugs as the US attempted to restrict growing coca leaves and other drug based agriculture by increasing the opportunity cost. As such policies favoured big enterprises [pdf]. As a result, due to high global demand and favourable climate conditions, Peru developed into the global leading exporter of fresh asparagus and the second highest exporter of preserved asparagus [pdf]. In terms of economic growth, the neoliberal reforms was successful as Peru experienced steady GDP growth since 1990. As Hepworth at el found "GDP grew by 9.2 per cent in 2008, the 11th highest rate globally, and foreign exchange reserves are at record levels” [pdf].

Given the profitable asparagus market, two primary areas where cultivated to grow the precious cash crop. Firstly, in the north in the La Libertad district - which benefited from the Region Chavimochic irrigation project as it gains its water supply from rivers in the Andes. Secondly, in the south in Ica - whose irrigation system relies mainly on limited ground water. Cultivating asparagus is more water intensive than traditional farming techniques and crops such as grapes [pdf]. Hence, once the asparagus boom started, agro-exporters drilled new wells and bought existing wells from cooperatives with government permission [pdf]. In essence, big enterprises aimed to monopolise access to fresh water. Consequently, both regions experience water shortage - where Ica is more worrying. The fragile desert coast of Ica had to be transferred into verdant farmland which did not only cost millions of dollars, but also depleted scarce ground water.

In terms of government actions, at this point it is too late to restrict the supply of groundwater - “there is little control over who pumps water, the aquifer could dry up before the government comes up with a plan to pipe in rainwater from the Andes or the Amazon as it has done in northern Peru." The ground water in Ica is said to run dry in approximately 10 years. This has major environmental as well as social implications. Environmentally speaking, given that Ica is located at the coast to the Pacific Ocean, the danger is that once the sweet ground water runs out, the salty ocean water will fill the aquifer which ‘will spoil the farm land and disrupt the ecosystem.’

Socially speaking, many rural traditional farmers, are pushed out of business as they can no longer water their fields. Big enterprises have not only used up most of the water, leaving little for traditional small scale farming, they also restricted the access to water. The ground water is scares making irrigation very costly. This either increases unemployment or causes farmers to be dependent on employment by the asparagus producers - which drives the water shortage further. Fresh water - a basic human need - is treated like an excludible good. As Emily Schmall states: “when a World Bank employee went in April to investigate complaints that loans made by its private sector arm had hastened the drying up of the Ica aquifer, he was shot at by gunmen after he spotted land pockmarked by clandestine wells."

Bottom line: Neoliberal policies allowed big businesses to exclude people from water access. Moreover, its wells dry out a desert district in an attempt to grow the economy. This has caused for alarming environmental risks as well as a social crisis. Traditional farmers are pushed out of business as they are excluded from the elementary right of water. Hence, the blood of traditional small/medium scale farmers is on the hands of big agribusiness managers in Ica. However, they will not be able to wash the blood off their hands as there's no water left.

* Please help my growth and development economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)