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Category: Economics

Goals and the Paths Forward

Goals and the Paths Forward

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Most media coverage on COVID and Climate Change have focused on the “crisis”, and much less on solutions. One reason many media outlets have failed to highlight the prescribed paths forward, is because they emphasize top-down constraints to limit human impacts on the world. In the United States, COVID and “Green New Deal” leadership often view people themselves as the problem – rather than the source of solutions. Policy directives are focused on restrictions. Citizens must to everything possible to limit our movements, socially distance, use less energy, lower our collective carbon footprint, and sacrifice to save ourselves and future generations.

However, if we take a step back and look ahead, there are multiple paths forward to achieve the goal of a healthier and greener future.

For Climate Change central policy directives outlined in The Paris Agreement and advocated by the World Economic Forum clearly target a decline of 1.5 degrees centigrade by 2050. Can we use the 1.5 degree change as a goal? Yes…but we should also understand it cannot be effectively measured with any real degree of accuracy. It is a general target, using a model subject to a multitude of variables and inaccuracies. In addition, we have no concrete means to track towards that 1.5 degree target. Instead, we must rely on targeting the underlying variables such as carbon emissions – with the expectation it will lead from “A to B” average temperatures over time. With the complexity of the problem, can we really expect a central governing organization to tell us the best path? -especially since the model forecasts 10-80 years into the future?

History is littered with the debris of top down organizational failures in which governments blindly or naively implement orchestrated social system and economic directives. While imperfect, the invisible hand of our traditional capitalist economic system has helped create the most free and successful society in history. These freedoms also encourage risk taking and innovations which have propelled our civilization forward.

In the US and the world, it seems we are on the precipice of potential redirection and reversion to centralized, planned government led economies. Recently, governments have had the ability to tell us what “non-essential” businesses should close – and who should not go to school or work. Unfortunately, these measures also serve to distort the basic economic system which has made us so strong. While the effortless benefits of a maternalistic government may be attractive to some in the short term, the reliance on an autocratic elite to guide us forward subjects society to gross misalignments of resources and controls.

It is difficult for anyone to predict the future – even with the wealth of information governments and societies can harness today. The COVID models predicting deaths and impacts far exceeding what was realized is just the latest significant example. In many cases, the COVID “cure” was far worse than the disease with prolonged school closures and other drastic measures. Implementing more robust measurement systems, information sharing, and creative solutions could have been much more effective. Looking back, it is clear we did not take the best path through the COVID “crisis”.

There are, and will be, many paths as we take steps forward. We will also discover new paths as we go. Prosperity and innovation will lead the way as humanity solves problems – for ourselves, our families, our communities, our nations, our environment, and our planet.

The Magic of Discovery

The Magic of Discovery

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Throughout human civilization we have discovered new worlds, new inventions, and new medical breakthroughs by chance. They are called “miracles” or “surprise discoveries”…and they happen all the time. Just two days ago, scientists surprisingly discovered life 900 meters below an Antarctic ice shelf:

“To their astonishment, they discovered a hidden ecosystem of sponges and other unidentified aquatic life forms living on the underside of a large boulder in the freezing, pitch-black depths.

It is the first time that immobile organisms such as these have ever been observed beneath the Antarctic ice shelf and their presence has left scientists scratching their heads.

“There’s all sorts of reasons they shouldn’t be there,” said researcher Huw Griffiths.”

https://www.unexplained-mysteries.com/news/343926/scientists-make-surprise-antarctic-life-discovery

Discovery is often a messy process. It can’t all be planned. Frequently, we find something different than we originally intended.

As COVID hit and the world was scrambling for answers, many doctors and scientists were told not to observe and not to experiment, but to obey and follow top down guidelines – almost universally? Why?

Doctors were penalized for advocating for evidence-based solutions. Narratives and ideas diverging from the singular voice of the World Health Organization were actively censored on social media. Scientists and our societies as a whole have been discouraged from solutions based on observations and data. We have been told the empirical evidence of age related immunity, and rare asymptomatic transmission is suspect or wrong. We all need to follow the “expert” guidelines regarding school closures, restrictions, and masks. The ineffective “lockdown” strategy should be followed at the costs of the economic and psychological damages – without question. Why?

It is clear there is a new paradigm which emerged with the COVID pandemic and is permeating throughout our society. We must blindly follow the centralized authoritative constructs of our medical and political leadership without questioning the reasons. Why?

If we, as a society, expect a centralized planned economy and centralized planned solution provider to excel beyond the capacity of a free and innovative society based on our founding principles, we surely have some more dark days ahead of us. The problems of tomorrow, including climate change, will be solved through prosperity: through creative and innovative solutions and chance discoveries and not through the dictates of a centralized neo-socialist oligarchy. We need faith in ourselves and each other. Miracles do happen. Society will solve problems and move forward. We just can’t expect it all to be planned.

The Wasteful Pursuit of Zero Risk

The Wasteful Pursuit of Zero Risk

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The headline of this article actually references a Forbes magazine subject line from April 30, 1990. I remember the column resonated with me. The basic principle was life is full of risks and the incremental cost of trying to attain zero risk is not only wasteful, but can also be harmful. As with the fundamental economic calculation, there is a cost associated with the benefit of achieving decreasing incremental risk. Sometimes those costs are direct, but more often than not, they are indirect – and often unforeseen.

As the world seeks to mitigate the risks of COVID, we also need to understand we will never achieve zero risk – and it should not be our goal. It is an unattainable mirage of absolute certainty which is distorted by the realities of nature and the world we live in. Also, risks can add value, and not just in terms of mitigating costs. Challenges and risks are often needed to teach us, and serve to preserve our inherent strength as move forward as a people – and as a society.

In the past few years there seems to be an abundance of efforts to protect ourselves, our children, and others from many “negative” external risks and even challenging words and discourse. Recently, “Cancel Culture” has gone so far as to try to limit acceptable debate, and essentially ban free speech on popular platforms such as Twitter and Facebook. In March of 2020, The World Health Organization even sought to control the acceptable discussions surrounding any external ideas or alternative views regarding COVID drugs and treatments. However, by isolating and insulating ourselves from dissimilar views and ideas, are we actually weakening ourselves and our natural defenses? How many good ideas and valid concerns were ignored or disregarded in an effort to provide a sterile platform for discussion?

Maybe having a uniform sterile platform isn’t always the best option? As a related medical example, aggressive hygiene controls and antibiotics have proven themselves as an indispensable lifeline and have prevented millions of deaths over the years. However, ultra-sanitary environments and widespread prevalence of these powerful antibiotics have undoubtedly been overused in many circumstances and may actually be doing more harm than good. While well intentioned, the pursuit of zero risk may actually concurrently weakening our bodies’ natural immune systems and increasing the virulence of bacteria and pathogens.

A recent study from Finland suggests, exposing children to less sterile environments actually boosts their natural immune system:

“A high level of hygiene, an urban lifestyle and an insufficient contact with nature reduce diversity in the organ system’s microbes. Homogeneity in microbes increases the risk of disorders in the immune system, such as atopy, diabetes, the coeliac disease and allergies.

Dozens comparative studies have previously found that children who live in rural areas and are in contact with nature have a lower probability of catching an illness resulting from disorders in the immune system.”

A forest-based yard improved the immune system of daycare children in only a month

The COVID-19 vaccines are an incredible tool to prevent infections – especially in vulnerable populations. Through the industrious work of thousands of medical/science professionals, and policy advocates, we have developed amazing miracle drugs to combat COVID in record time. And, just as with antibiotic use and prevalence, we should be mindful that our body’s natural immune system has been built through millions of years of evolution to fight off pathogens and protect ourselves and others – and we as a society should not be dependent on vaccines to fight EVERY ailment.

There needs to be a natural balance with risks as we move forward. Is it wise to close businesses and schools in the pursuit of zero risk until we are all vaccinated? At what cost? Will it stop at COVID? Or will we just need another two weeks to flatten the next curve?

A Tale of Two States: North Dakota and South Dakota

A Tale of Two States: North Dakota and South Dakota

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When attempting to determine the effectiveness of responses to issues or the results of experiments, using a simple A-B test often yields straightforward answers to more complex problems. If we have two similar samples, a binary “Do X for sample A, and do Y for sample B” can be an easy way to see which intervention is more effective.

With COVID-19, government policy mandates have been unprecedented. As with most other countries around the world, the United States seen dramatic examples of top-down restrictions designed to protect citizens from the invisible virus – and each state has had different approaches. But have these interventions been successful? Have they saved lives? How many? Or destroyed livelihoods? Has the cure been worse than the disease?

Although the answers to these questions remain largely undetermined and are difficult to discern with a high degree of confidence, we can look at relatively similar sample populations which had substantially different policy interventions and examine the results. For this example, let’s compare COVID’s recent impact in North Dakota vs. South Dakota:

Both states share similar climate profiles, population size and densities, and overall demographics. While different in some respects, the core similarities of each state provide us with a unique opportunity to isolate policy interventions as the most significant underlying variable with the most recent wave of COVID infections.

North Dakota’s Government Response: While initially advocating for a limited government response, on November 13th, 2020 Governor Burgum signed an executive order for:

1) Mask mandates (all indoor and public settings – 30 days)
2) Bars/Restaurants 50% capacity, 150 persons. Curfew 10pm to 4am.
3) Banquets, Halls, events 25% of capacity.

These orders were eased somewhat and extended until mid-January.

South Dakota’s Government Response: Governor Noem has advocated or public advisories, protecting vulnerable populations, and championing individual liberties and awareness.

So, what were the results?

The results have been nearly identical from a practical standpoint. In isolation, it would appear North Dakota’s government interventions led to a direct reduction in COVID cases. However, the timing of the downturn in cases also happened almost exactly at the same time in South Dakota (without the restrictions).

Below are the COVID case and fatality trends for each state:

source: worldometers.info

source: data.cdc.gov

Note: The CDC cause of death data is updated on a slightly delayed basis based on the medical record reporting. As a result, the weekly death totals will likely rise to a normalized trendline for recent weeks. However, the directional trends related to cause (COVID vs. non-COVID) should remain the same.

Digging deeper into the numbers it appears the relatively small variances in cases per population, and overall case fatality rates could be largely driven by demographic differences as seen in the census numbers below:

https://www.census.gov/quickfacts/ND

https://www.census.gov/quickfacts/SD

So…Do government mask mandates and restrictions work? Given the available data, a case could be made either way. However, it is clear the results (restrictions vs. no restrictions) are similar enough to warrant a much closer look. It appears mother nature is firmly in control – despite our best efforts to mitigate the impacts through mask mandates and school/business closures and restrictions.

The Global Warming Model and Climate Change Initiatives

The Global Warming Model and Climate Change Initiatives

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The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change. Most climate change initiatives are based on the models and research findings from this UN group. They rely on the DICE model:

The Dynamic Integrated Climate-Economy model, referred to as the DICE model or Dice model, is a computer-based integrated assessment model developed by 2018 Nobel Laureate William Nordhaus that “integrates in an end-to-end fashion the economics, carbon cycle, climate science, and impacts in a highly aggregated model. link

The IPCC recommends substantial initiatives to target a 1.5 vs. 2.0 degree increase in temperature by 2050 per the DICE model.

Worldwide, thousands of climate change initiatives are guided by these targets. Given the complexity of the model and reliance on dozens of input parameters, many scientists and policy makers question its accuracy… Per the Heritage Foundation:

  • The EPA uses unreliable estimates of the social cost of carbon (SCC)
  • The integrated assessment models that the EPA uses are far too sensitive to assumptions to be used in devising economic regulations.
  • The DICE model is based on an extremely unrealistic time horizon that sums damages over the course of 300 years.

Forecasting models can be incredibly valuable. However, they are often wrong and subject to significant errors and miscalculations – as we have seen with the initial models for COVID-19. For COVID-19, the early models projected deaths far exceeding observed rates. The result has been an extreme over-reaction with lockdowns, business mandates, and restrictions- all causing unnecessary economic and social damage. With the benefit of empirical data and observations, the COVID model’s initial projections look absurd.

The DICE model has dozens of variables – each of which can have a significant impact on the forecast accuracy. Today, those underlying variables are often unknown or fluid – constantly changing over time. If we treat climate change as a crisis (like COVID), we risk over-reactions and miscalculations at the extremes. Climate change is happening. It always has…but climate change is not a crisis. We can move forward empowered by data and observations, and course correct along the way. There will be incredible innovations in the next 80 years which will make the problems we face today seem trivial.

To move ahead, we need a model that incorporates as much near real-time data as possible. With the advances in data, AI, 5G, and the internet of things, we measure our progress incrementally and adjust our forecasts and actions to adapt to the changing variables, observations, and innovations. Blindly following massive efforts like the great leap of the “Green New Deal” is likely to create drastic, unnecessary disruptions to our economy and society. If far-left politicians succeed in changing the narrative to make climate a “crisis”, they will push society to cede rights and responsibility to government to “save the world”. The probability and consequences of over-reaction is monumental.

Let’s move forward with relentless determination and drive towards our climate goals…but learn and iterate along the way. With data and observations we can adapt models and our efforts accordingly. We don’t need a great leap… We need steps in the right direction through innovation, education, and discourse.