Tuesday, July 8, 2014

Defense and Climate Change: The Value of Waiting

Economists have models and explanations for anything and everything. Relevant to today’s top issues is the value of waiting. I am sure that many women wish they didn’t have to wait nine months to deliver but they know that trying to have a baby at the end of the third month would not have acceptable results. An economist would say something stupid like – the marginal costs of waiting one less month is greater than the marginal benefit and therefore waiting has value. In the case of pregnancy, most of us wait about nine months. Of course we wouldn’t want to wait 18 months because we know the marginal costs of waiting more would outweigh the benefits.

Maybe you don’t love my example, but we face the costs/benefits of waiting all the time. Should I wait at this red traffic signal for another minute? The young guy with slicked back hair wonders how many more songs to sit through before he asks the babe in the pink hot pants to dance. If our wait is too short, we may experience the costs of a hasty decision. Wait too long and the opportunity escapes.

This issue of waiting came to mind as I was playing with my new Nespresso machine and thinking about climate change and national defense. ( I can't drink JD all the time!) With respect to climate change we have one group of people who deem it urgent. These people advocate full speed ahead when it comes to ending reliance on coal and investing in new non-renewable sources of energy. To the climate change advocates, waiting is not a luxury we can afford. With respect to very recent changes in global terrorism and American security there are some people who also think that waiting is not a viable option. To them terrorism is on our global doorstep and needs to be addressed firmly and immediately.

The value of waiting is being evaluated seriously by climatologists and defense planners. Sadly much of the resolution to these waiting issues is ideological. Many of those who would put climate change in a speedboat are the same folks who would see no rush to deal aggressively with terrorism.  And, of course, vice versa many who favor a rapid response by the US military are those who would drag their feet on climate change. This ideological approach needs to be replaced by something more sensible.

The value of waiting is affected by the expected costs and benefits of waiting. I say “expected” because these impacts are not known and will play themselves out in the future. That means several things. First, except for your spouse, no one knows the future with certainty. Second, that means we have to use models or somehow guess about the future. Third, it means we will have plenty to argue about since no one knows the future. Fourth, the less ideology and emotions play into this valuable exercise, the better off we will be.

But we are a long way from that situation. My bearded long-hair friends say that America has suffered enough. We have no stomach left for a fight. As in the recently cited report by former Treasury Secretary Hank Paulson, these groovy dudes are sure that the costs of global warming are ever-present, immediate, and catastrophic. That’s it. Story over. For every person with those beliefs there is one who thinks that if we wait too long to weaken a growing terrorist threat, we will surely be overrun by vicious enemies who will show us no mercy. These khacki-wearing, button-downed,  crew-cuts see the immediate employment and growth impacts of vigorous environmental policies as swamping any possible future benefits.

Okay my depictions of extreme lefties and righties are pretty stupid but the point is not. We are getting nowhere and perhaps risking our future because we are letting extreme views prevent us from hard-headed analysis about our most important policies. Consider that we have four possible SOLUTIONS, two of which hardly ever get considered:

·        Conservative  Defense Fast; Environment Slow
·        Liberal           Defense Slow; Environment Fast
·        Expensive      Defense Fast; Environment Fast
·     Cataclysmic    Defense Slow; Environment Slow

To decide on one of these or perhaps some combination of these solutions means we have to do the work. We might not know the future but perhaps we can throw away the knives and swords and make use of our best experts. What do we need to know?

·        If we wait on defense, what can we expect from terrorism? What is the most likely outcome? What is the very worst that can happen? How likely is that?
·        If we wait on climate change policy, what can we expect in the way of negative impacts? What is the most likely outcome? How likely is that? 
·        If we move quickly on defense, how much will that cost? What benefits will be gained? Can these policies really accomplish their goals? If the US acts alone, can these policies really accomplish their goals?
·        If we move quickly on climate change, how much will that cost? What benefits will be gained? Can these policies really accomplish their goals? If the US acts alone, can these policies really accomplish their goals?

I know that I am unrealistic to think that our present government representatives can shed their blue and red uniforms to do something sensible for the good of the country. But without a real assessment of these questions I don’t trust either party to do the right things. As in my last post about poverty, I come off sounding naïve in the real world for suggesting that real problems have real solutions. Isn’t everything simply political and ideological? Maybe that’s true. But if people don’t demand better processes and outcomes, then it seems to me there is no way to ever get them. So I continue to spout off even if it amounts to urinating into the wind. 


  1. You certainly selected two hot-button topics for your spout! I'm not a denier, per se, in that I believe the earth's climate has changed several times throughout its history. I do deny that mankind is the primary contributor. How arrogant! Can we be better stewards of our resources? Definitely, but to think the US alone can have a major impact on climate is silly....unless of course the intent is to drag our economy back to the Middle Ages.

    Between climate and defense, I see only one mandated by our Constitution. I don't have a problem with the priority. If we choose in today's social environment to put defense on the back burner in order to take care of "climate change," we'll probably be worrying about other things more...like please sir, can I keep my head attached to my neck?

    Unfortunately, ideology drives everything today. Gone are the days of statesmen who put country first. There were no red and blue sides, just purple.

    I seem to remember a concept called "opportunity cost" where real people used real data to arrive at real solutions to real problems. Today I'm sure it would be too much to expect those same people to use the data to arrive at a nonpartisan "purple" solution. I believe we've gone over the cliff and haven't realized we're hurtling toward the bottom...so far so good as we pass the 6-year mark. I am disgusted with the system we have created through our voting-booth choices.

    1. Thanks Fuzz. I figure it ain't over until its over. Ideology has always been part of the equation. Today perhaps ideology plays too much of a role. But we are largely a practical people and I am hoping the day will come where opportunity cost is again a relevant concept. If climate change or whatever turns out to require a fast major response than so be it. But let's first put it to a proper test.

  2. Larry, while I agree that most issues require the DMAIC (Define, Measure, Analyze, Institute and Control) Principal to contribute to real sustainable solutions. But, often Decision-Makers spend too much time in the defining, measuring and analyzing stages, but fail to come in agreement with any sound conclusions and implement any timely actions to solve the problem.
    For instance: How long does it take to determine if Islamists Radicals are at War with the West (Especially US and Israel)? Is it when Islamist Radicals take over the US Embassy in Iran? Or is it when Radicals supported by Iran blow up our military barracks in Lebanon? Or is it when they attack our military units delivering humanitarian food stuff in Somalia? Or is it when they blow up the Barracks in Saudi Arabia? Or is it when the Radicals blow a hole in the US Cole? Is it when they try to bring down the Twin Towers with a truck bomb? Is it when Al Qaeda publishes a Fatwa that they are at war with the US? Or do we always wait till the Radicals fly Planes into the Twin Towers and Pentagon? Does this war just stop when the current President declares that the danger is gone and Climate Change is a bigger danger?
    Climate Change is the new biggest threat? For the Liberals the science is settled in their favor. But, where are the facts? Where are the DMAIC principals being pursued? What is the ideal Global temperature for the continued existence of mankind? Are we better served with more ice, colder and longer winters and shorter growing seasons? Where are the models that have accurately predicted weather change over the past 15 years? Past 30 years? Why has global temperature levels been stagnant while CO2 levels have risen? So where is the correlation to CO2 and Global temp? Who benefits from stricter CO2 regulations on US Coal fire plants? Will shutting down US Coal fired plants reduce worldwide CO2 levels? Will attacking our energy sector with harsher EPA Regs hurt or improve the US Job Market. Will it make heating or cooling of middle and low income American homes more affordable or does it add to Income Inequality?
    From a conservative perspective, Liberal refuse to consider Facts in the debate, and in the current divided US Government, the Conservatives are ‘doing something” when they try to stop the implementation of actions that are made contrary to the facts (vs. made according to ideology).

  3. Thanks Danny. You offer excellent questions that need to be answered and discussed. But I am guessing from your last paragraph that you already know the answers to the questions and are comfortable to continue the ideological divide when you say that it is the liberals who "refuse to consider Facts." While some people on both sides will always refuse to engage in the debate, I am hopeful that people in the middle will exert more influence over time on these critical questions and policies.

  4. Larry..
    Your blog focused on the Value of Waiting. Your blog seemed to point out the need to go slow and evaluate the facts before taking action. It is interesting that when a Conservative (me) agrees with a “Middle of the Road” Professor, his agreement is perceived as ideology rather than pragmatism.
    The Climate Change questions are valid questions that should be answered prior to taking action that hurts the US economy and US Companies’ ability to compete on the world stage. The Liberal Progressives are the ones shutting down debate and moving forward with the ill advised regulations. The liberal ideologues declare that the science is settled, even though serious questions are still open for debate. The Unionized schools teach our Kids that the science is settled. The Liberal MSM tells the low information Voters that the science is settled. So, too many Moderates (who are swayed by PC Police and bad information) compromise with the Liberals and continue to move our country to the Left.
    I worked in an industry that was devoted to “Clean Water”. There was a need to clean up America’s water. Both left and right could agree on the need to take action. The same is true with the need for clean air. To remove toxins from the air is obvious. The need to cripple US Energy over CO2 emissions is not obvious.
    However, related to Radical Islamist Terrorists the facts should be more obvious. We are at war. They declared war on us. The Jihadists want the destruction of Israel. The Jihadist want the “Great Satan” (The USA) destroyed. They want Democracy defeated and replaced with Sharia Law and a Caliphate. We do not have to guess about their motives, because they have clearly shown us their intentions. While the President campaigned that UBL was dead and Al Qaeda was on the run, the Jihadist attacked our mission in Benghazi and killed our Ambassador. No not all Muslims are Radicals. But it is estimated there are 1.6 Billion Muslims in the world. It is estimated that 10 – 15% of Muslims prescribe to the Concept of a world Caliphate with Sharia law. Take the lower number of 10%. That leaves 160 Million radicals to do us harm.
    Based on known facts, the Islamists are a much greater threat to America than Climate Change. And, the danger is much more immanent.

  5. Danny,

    My point in the blog is not to go slow -- it is to quickly put together facts basic on a more complete and honest assessment of the questions. Your point is clear and is exactly the one I portrayed as Conservative. You want to go slow on climate change and fast on defense. You seem quite sure in your comment above that you have made up your mind. The facts are in and you have made your decision. I don't think I am a middle of the road person. I just think the facts are not settled. I would like to see a more complete and less biased set of answers. If you are convinced on the facts then that's great. You have a clear position.

  6. Dear LSD. Yes, everything now IS political and ideological. People DO demand better processes and outcomes (however, consistent with their own politics and ideologies)—that is the solidarity of the problem, particularly given the red/blue hue in D.C. Talking heads declare adult conversations are needed for resolution (hint, hint compromise to my politics and ideologies), but the sad irony is that those making the declarations are in fact adults. There is an element of dark humor therein.

    We will remain in neutral gear as long as a D occupies the WH and Congress is split. But, given the magnitude of the costs and long-term implications stalemate is a good thing. Unfortunately, the media—not only U.S. but many others—are the fifth estate to which the Constitution guarantees freedom of expression. And as long as the media bend left our country will weaken further as resources are wasted on trying to control climate and our defenses retreat.

    Any further real/honest assessment of the questions and presentation of (new/additional?) facts will be twisted/misrepresented/spun by the media and accepted as gospel by the under-informed, and as long as D control the WH and Senate exec fiat and agency regs will rule. Case in point, XL Pipeline—how many more facts are needed for approval? Rather than more assessment, we need Conservative leadership in the WH, Senate, and House.

    I think the red/blue uniforms in D.C. doing nothing is the sensible thing for the good of the country. I prefer that outcome to a blue compromise moving the country further left and weaker. The adverb “quickly” (and possibly “honest”) applied to D.C. is oxymoronic.

  7. Hi Charles,

    Like you I would prefer to see the climate changers on a slower bus and the defense issues handled more quickly. But as you say, politics is politics and none of that is going to happen. I do think that both issues deserve at least a little more common sense but it seems impossible now to get by all the screaming. For example, a more realistic appraisal of the costs of moving ahead quickly on climate change would appeal to the sensibilities of moderates as well as conservatives. On the other hand, while terrorism is plain to see and is a horrible threat, I don't think that the conservatives quite know what to do about it or why. Increasingly trying to foist democracy on a bunch of hateful tribes is not promising. And what sort of military options we use in Syria or Iraq or Iran -- are not fully agreed by Republicans. A little more clear thinking on these issues would help before we move forcefully ahead. So while the reds and the blue will not waltz off into the sunset there are some places where a little more realism could draw in some moderates. If Brazil can lose in futbol 7-1 at home....

  8. Dear LSD. I can’t imagine what more realistic appraisal of the already voluminous data/facts would do to better clarify the cost/benefit of trying to control climate, er, I mean reducing the average global temperature a smidgeon. We know numerous jobs will be lost in mining and power generation when coal plants close—that is undisputed. We know that CO2 scrubbers are awesomely expensive—that cost can be pinpointed. We know that China, India, Brazil, and Africa are pursuing fossil energy with reckless abandon—leaving only the sucker developed economies to wreck themselves by outlawing carbon and pursuing a faux carbon tax. We know despite the climate-gate fiasco and the howls and claims by the pro-anthropomorphic climate clowns that their models and forecasts are flawed—that causality has not been proven between elevated carbon and increased temps. I don’t think the climate clowns can add any more (modeled?) facts to support their position—only emotional appeals of future more grandiose catastrophes—because the golden fleece of anthropomorphic climate change—the correlation coefficient —is elusive. Even their models cannot predict the change in temp given a change in carbon levels. So what’s the point of more data? I think we—moderates and conservatives—know the truth.

  9. Thanks Charles, I agree that there are a lot of data points and allegations out there. But what is clearly missing is some sort of non-partisan analysis of this volume of often conflicting information. Some of the info is good and solid -- some of it is crap. Even so-called scientific or expert opinion is tainted by ideology or peer pressure. It would be naive to think that all of that can be removed from the discussion. But I think we are still a very long way from what is needed -- dispassionate experts weighing in on the relevant facts and realistic policy recommendations.

  10. Dr. Davidson,
    I recently finished reading the book the Economic History of the United States by Lawrence Hughes. Which led to reading five of Economist John Kenneth Gailbraith’s books. I find it fascinating in those texts how as an economic model, involuntary servitude had become less and less profitable preceding the Civil War. They suggest that waiting 20 years would have been a better alterative since no killing by war would have happened. The reason is, prior to the prosperity brought by industrial revolution, slaves looked at the free farmers and concluded they are no better off than the slaves. Both were dirt poor. But, as free southern farmers became more wealthy, so many slaves escaped that the extra cost of guarding the slaves made slavery unviable.
    Fast forward to World War II. Dr. John Kenneth Gailbraith's two jobs during the war were, one, in charge of price control for the nation, and two, economic assessment of strategic bombing by the United States on German cities. The results of teams of economists, later validated by German statisticians, was bombing German cities had no benefit effect to end the war. Germans simply moved the industrial machines used to make the plans. And ironically, plane production actually increased as a result of the bombing cities.
    Dr. Galbraith sadly reports that war planners dismissed the economic conclusions and escaladed the bombing.
    Lastly, the work of decision scientist Scott Paulson has shown that terrorists are essentially average people except in one respect. They hold on to anger longer than "normal people, do. His academic work showed that war couldn’t reduce terrorism as it simply creates more determined resolve to fight back.
    Due to the moral hazard created by those who benefit from arms production, it seems that since the founding of the United States, waiting to begin war is probably the best alternative. Dr. Gailbraith also notes in his book the “Anatomy of Power” that military contractors worked their politically channels to stop Dr. Gailbraith’s appointment as professor at Harvard and actually succeeded in delaying his appointment for one year, to shut him up.
    Regarding the climate change the best and most objective data I have found is from the gauging station the U.S. Geological survey. They have on the Ohio River at Louisville, Kentucky the longest continuously read gauging station in the United States. There everyone can see the flow of the Ohio River every day for the past 34,000 days. I downloaded the data into excel to check it out. As a trend, the results are very concerning. For the past 100 years our climate has gotten systematically wetter. Gulp. The standard deviation does not appear to be changing. Double gulp. The flow in the river is about 20% greater than it was 100 years ago. However, the size of the drainage basin is the same as the land area of 100 years ago is the same as it is today. The concern is stems from the fact that warm air can hold more moisture than cold air due the proven relationships with temperature and moisture.
    Since these wetter flows are without bias and were observed over the past 100 years. We can assume that the probability is very high that our climate has materially changed in the past 100 years.
    What are the costs of waiting to reverse the process? Before I attended Kelley, I worked as a registered professional civil engineer on enormous public works projects to clean the water and air to protect public health from disease. Before that, my family worked in farming for the past 400 years. Based on those experiences, the cost of waiting actually makes me scared for where headed into as society if we do not pause and rethink seriously about the challenges we face due to climate change.
    Conversely, I am not afraid of prolonged terrorism. Because prolonged terrorism is not terrorism. It is war. Finally, war is simply too expensive for most counties to sustain.

    1. Dear Anonymous, thanks for your comments. While I am not convinced by them I love the dispassionate way they are delivered. Your points can be constructively debated. I'd love to hear an informed retort or disagreement on these same points. Our press and even many of our educational institutions prefer emotional outrage to calm calculation. Too bad because we get nowhere in approaching our problems.