Saturday, August 21, 2010

Building with Twigs and Birdsnests

Scott Adams in hilarious form on his experiences trying to build a green home:

Let's say you love the Earth. You see an article in a magazine about a guy who built a "green" house using mostly twigs, pinecones and abandoned bird nests. You want to build a green home, too. So you find an architect, show him the magazine and say, "Give me one just like this."

Good luck with that.

Your architect only knows how to design homes using materials that his local planning commission is likely to approve. But he wants the job, so he tries hard to talk you out of using twigs, pinecones and abandoned bird nests. He tells you that no builder will build it. He tells you it won't get approved by the city. He tells you it won't stand up to earthquakes, hurricanes or termites. But you persist. You're saving the Earth, damn it. No one said it would be easy.

So the architect—and later your building engineer, too—each asks you to sign a document saying you won't sue them when beavers eat a load-bearing wall and your entire family is crushed by forest debris. You make the mistake of mentioning this arrangement to your family, and they leave you. But you are not deterred because you're saving the planet, damn it. You'll get a new family. A greener one.

Tuesday, August 17, 2010

A Little More on Disaster Loss Statistics

A little more on yesterday's discussion.  First, as I suspected, there does seem to be a statistically significant trend to this graph:


Wednesday, August 11, 2010

Two Corollaries to Stein's Law

I see in the paper today that the US trade deficit increased.  A couple of days ago we learned that China's trade surplus "surged last month to its highest level in a year and a half".  Then, this morning, I read Michael Pettis's very thoughtful post on analogies between Chinese and Japanese growth, and the difficulty in rebalancing China's economy.  I was particularly struck by this observation:
But for a long time the problem of misallocated investment, which was whispered about in Japan but not taken too seriously, didn’t seem to matter. After all, as nearly everyone knew, Japan’s leaders were extremely smart, with a deep knowledge of the very special circumstances that made Japan different from other countries and not subject to “western” economic laws, with real control over the economy, with a strong grasp of history and penchant for long-term thinking, and most of all with a clear understanding of what was needed to fix Japan’s problems.

And look what a great job they had already done: by the early 1990s Japan had generated so much investment-driven growth that it had grown from 7% of global GDP in 1970 to 10% in 1980, and then surged to nearly 18% at its peak in the early 1990s. In about twenty years Japan’s share of global GDP was two-and-a-half times its initial share. That is an extraordinary growth story and one that can only be explained as a function of a new kind of economic thinking, right?

But less than twenty years later, after a terribly long struggle to adjust to high debt levels and massive overinvestment, Japan is about to be overtaken by China with only 8% of global GDP. Japan, in other words, has given back in less than two decades almost the entire GDP share it had taken in the two astonishing decades that preceded it (while during the same period the US has maintained its share). What’s worse, it is hard to pick up a newspaper today and read about Japanese policymakers without getting the idea that they are a totally dysfunctional, narrowly ambitious, and not especially savvy lot, much like their US and European peers. As Mortimer Snerd used to say, who woulda thunk it?
Stein's law, famously, says that "If something cannot go on forever, it will stop."  I would like to propose two corollaries that I've observed empirically in human affairs:
  • It will go on a lot longer than we think
  • It will end badly when it does stop.

Monday, August 9, 2010

Matt Simmons, RIP

A reader emails to alert me to this news:
Matthew Simmons, an international oil expert who most recently focused on developing renewable energy from the waters off Maine, died Sunday night of an apparent heart attack, his office is reporting. He was 67.

Simmons founded the Ocean Energy Institute in 2007, hosting a grand opening of its new office last month in Rockland. The goal of the think tank and venture capital fund was to attract investment in research to make Maine a global leader in offshore wind and other ocean energy sources.

According to police reports, Simmons suffered a heart attack while in a hot tub at his home on North Haven. An autopsy is planned for today in Augusta, according to the Knox County Sheriff's Office.

Simmons was a leading energy investment banker, a former energy adviser to President George W. Bush, and author. He wrote the 2005 book “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,” which laid out an argument that the world was approaching peak oil production.
Notwithstanding this, I am deeply shocked and saddened by Matt's untimely end.  He made a difference,  and in particular was an enormous influence on me, even where I ended up differing with his view.  Here's an interview I did with him back in 2005.

Friday, August 6, 2010