Stidmatt

People who have little knowledge of economics, politics, or climate science often try to lump climate policies into two buckets, “market solutions” and “non-market solutions”. This is a weird way to look at the issue in my opinion. First of all, we have to understand, what is a market? A market is where two or more people meet to exchange goods or services. Any time where two or more people choose to exchange items, a market has been made. If two children are trading Pokemon cards and they trade a Pikachu for a Charizard, they have just formed a market, and they have determined that the Pikachu card is equally valuable as the Charizard card.

That’s it. There’s nothing else to it. Every economics textbook regardless of its political bias will say this. It’s a really simply concept.

Market based solutions versus non-market based solutions is analogous to physics based engineering and non-physics based engineering. One of them works, one of them is stupid.

From this, we can quickly interpret what the term “carbon market” means. It is a very simple concept, it is the global market where people buy and sell fuel which emits CO2. Pretty simple.

So when we are looking at climate change solutions, at some point that person had to decide to purchase gasoline to fill their car, pay the bill for their natural gas, or pay the electric bill for the electricity which was generated with coal. Unless if that person was going to drill for the oil themselves and process it themselves, and use that oil to fill their car (a process which is going to be burdensome no matter what) they are going to participate in a market in order to get the gasoline to fill their car. At this point, we now know that EVERY effective policy to fight global warming is inherently a “market based” policy because EVERY policy to fight global warming is going to have to engage with how people are buying and selling (always and, never or) fossil fuels. This means the term market based is always accurate, and everyone who claims a policy is not market based is either lying, or the policy is snake oil.

There are only a few questions left when evaluating a policy:

• Breadth (how much of the carbon market is covered)
• Depth (how much will carbon emissions decline)
• Equity (how will this policy impact inequality)

For me, depth is the most important part of the equation, since global warming is inherently inequitable. A policy which has more depth will be inherently more equitable than a policy which does less, no exception. Breadth and depth are deeply intertwined, if you exempt the major polluters in your area, your policy will not work, so you cannot have depth without breadth. Equity is of course going to naturally stem from policies with the most depth and breadth, and by doing this you will maximize equity in the long run. If you have a policy with a double dividend you can choose to use that money to improve equity in the short run as well.

There are really only a few policies we need to look at now, namely:

• Carbon tax
• Cap and Trade
• Deadlines
• Carbon offsets
• Regulations
• Subsidies

Carbon taxes are the best policy of them all, they have the most breadth, and depth. In terms of equity you can choose to use the double dividend from the carbon tax in any way you like, and one possible use is to improve equity through either government spending or slashing regressive taxes. A properly designed carbon tax will have few or no deductions, taxing every ton of carbon dioxide emitted equally. This is the most important feature of a carbon tax, since exemptions to proposed carbon taxes historically have gone to the biggest polluters, which reduces equity,  destroys breadth, and eliminates most if not all depth. A properly designed carbon tax however will have the widest possible breadth in a jurisdiction, ensuring depth is proportional to the tax rate, and the expenditure can be used to improve equity if that is what the people in a region choose to use the proceeds for. The experiences of Canada and Australia have proven that carbon taxes successfully reduce emissions, and create large double dividends which have helped governments cover necessary programs. They work in theory and they work in practice.

Cap and trade has some major problems. The rate plummets during recession, destroying depth, and this is why cap and trade historically has failed to create real reductions in carbon emissions. California has a cap and trade program, as does the European Union. These jurisdictions have not seen any significant difference in their emissions compared to places which don’t have cap and trade at the same, particularly after recessions. Cap and trade has been tried, and everywhere it has been attempted it has failed to reduce emissions. This policy has a major flaw with how the rate can drop suddenly, and because of this it usually does not reduce carbon emissions in the long run. It has nothing in common with carbon taxes, it does not generate a double dividend, and it is not a solution.

I love deadlines, I like the whooshing sound they make as they fly by.

Carbon offsets do not reduce carbon emissions. NPR Planet Money

Regulations can be effective at removing or eliminating specific sources of pollution, and have been in the past. The breadth tends to be very narrow and the depth in the target can be large. This is such a large topic that entire books can barely scratch the surface! In short, regulations typically work by reducing the supply of activities which generate carbon emissions, which makes them a supply side policy. There is nothing inherently wrong with supply side policies, and there are some very useful tools for environmental economics in this category which have been extremely successful, such as the Clean Water Act.

Subsidies can be effective at fighting climate change. Not all subsidies are created equal, since the cost effectiveness of subsidies regarding how much they impact climate change is highly varied. Reducing the price of electric vehicles (for example) does reduce demand on gasoline powered vehicles, and that does make an impact on global warming. Whether it is as cost effective as a carbon tax is something which is studied intensely. One good example of a subsidy which works is to subsidizing carbon sequestration technology which takes carbon out of the air which is a good technique to fight climate change.

All of these are ultimately market based solutions. Regulations are supply side economics, carbon taxes are using tax wedges, subsidies are using subsidy wedges, and cap and trade and carbon offsets generally do nothing in the long run. Deadlines are a joke.

It’s really just that simple.

Pretty much every policy you can name fits easily into one of these 6 categories. They all are either market based solutions, or they are not solutions. The policies I have lobbied for have been carbon taxes and subsidies, which are essentially the same type of policy, since tax wedges and subsidy wedges are essentially the same thing, just mirror images of each other.

Those are all 6 policies which are frequently talked about to fight climate change, how each of them work, and why I choose to fight for the policies which I work on.

Nothing

I live in Washington State, and in Washington we have two types of state-sponsored programs to save for college. One of them is the GET Program which is like a traditional pension, and one is the Dream Ahead which is a 529 plan.

So which one should you pick?

Well, when considering any long run investment plan what you should care about more than anything else is the probable long run growth. Anyone who has ever played Settlers of Catan (or really any board game involving dice) understands a certain level of probability. If I were to roll a single unweighted six sided die, the distribution curve of  that die roll is going to be completely even, where you are just as likely to roll any integer between 1 and 6 inclusive. This is a perfectly random situation. Now, if I were to roll two dice simultaneously, even though each die is totally random, the sum of those two dice is no longer a perfectly equal distribution. If I roll 100x2d6 (roll two six sided dice 100 times) then I will find that the most commonly rolled number is 7. This is a perfect example of how order can emerge from perfect chaos, where 1d6 is perfect chaos, but by rolling 2d6 does not have perfectly chaotic results.

The economy works the same way. As you keep rolling the same dice enough times, even if you cannot predict every result with 100% accuracy, you can still predict the overall trend in a way which allows you to make an educated decision from the chaos. The 529 plan and any IRA plan use this mathematical fact to provide long-term stability and growth.

The other option is the GET program. The GET Program has the benefits pegged to the current cost of tuition at the University of Washington. For people my age (born in the early 1990s) the GET program was a good deal, because tuition grew significantly when I was in high school. The problem nowadays is that so much tuition is paid for by students nowadays that is about as expensive as getting a grant to a private college in many situations. Tuition is never going to go up as much as it did when I was in high school ever again. This is a good thing. The problem however is that if you go for the GET Program, yes, you have an absolute guarantee that they will cover the cost of tuition, but you are paying  the full cost of tuition today and there is absolutely no guarantee your money will ever gain interest. Hopefully it won’t, because the cost of tuition will stagnate or drop if the legislature does what is good for our state. The GET program is ” guaranteed to keep pace with tuition and state-mandated fees at Washington’s highest priced public university” but this does not mean it is guaranteed to grow. If the legislature do their job to grow our human capital, credits bought in the GET Program will lose value.

At an 8% interest rate, $100 invested in the stock market today will be worth around $370 when a child turns 18. Adjusted for inflation (2% APY) that money is worth $262 in today’s money

When you are buying into the GET program you are gambling that tuition will grow by more than 260% over the next 18 years after inflation. That is the only situation where the GET program is worth it.

When you are buying into a 529 plan you are predicting that tuition is not going to increase as much as the stock market over the next 18 years.

If we look at historical data which is available at the Department of Education‘s website, we find that tuition grew by 165% from 2000 to 2018. We also find that over the last 20 years, the inflation of tuition (after general cost of living) has only exceeded 4% twice over the last 20 years.

For the GET program to be worth it, college tuition will have to grow over 1.5 times faster over the next 18 years than over the last 18 years. If you don’t expect the tuition’s inflation rate to suddenly and imminently increase by over 150%, than you should invest in the 529 plan.

Saving into a plan which has no way to predict how much you might make, which could give you a return of 0% over the future sounds like gambling to me.

Tuition inflation might have been extreme over the last 20 years…

But it still was slower than the growth of the Stock Market.

The mathematics is clear.

Don’t buy into the GET Program.

Save in a 529 plan.

Back when President Obama was President, he was not able to successfully appoint many of his court appointees because the Republicans in congress blocked every single one of his appointees. This has fundamentally changed the Federal bench. We will continue to deal with the impact of this for many years to come.

Now most people blamed Mitch McConnell for this, and there is validity to this because he was the Senate Majority Leader and he successfully kept his party in line when they controlled the Senate for the last two years of Presidency.

Right now we are seeing a significant reduction in President Biden’s ability to pass legislation through congress. We have a majority in both the Senate and the House. The majority in the Senate is because the Vice President breaks ties. We obviously have the Presidency, and it is very clear he is a truly Democratic President after President Biden’s speech earlier this week.

With all of this, we should be seeing some significant legislation pass through congress given how we saw victories for two elections in a row. Democrats won more votes than Republicans in the Senate in 2016, and 2018. Democrats still lost the popular vote in 2020, but this is probably because neither California nor New York have Senate races in that year. The Senate is a very unique institution.

However, the Senate of course has the filibuster which I have written about before. Because of this it effectively takes 60% of the votes in order to pass legislation. This is almost wholly unique among national legislatures to effectively require 60% of the body to agree in order to do almost anything.

Now there is a movement to remove this peculiar requirement, which is to use the nuclear option which is simply to remove the rule so the Senate can pass a bill with a simple majority of the vote. The nuclear option will make the Senate normal again, so that it will take a simple majority of the Senate in order to pass legislation. This will fully disarm Mitch McConnell so all we have to worry about is getting all 50 Democrats on board with a bill and it will pass. This prevents bills from passing through the Senate, making our government dysfunctional.

It means majority rule. Simple as that.

But unfortunately… even though it takes only 50 votes to amend Senate rules, we have two Senators who are standing in the way of this necessary reform to make our government work for Americans. One of  these senators is Joe Manchin and the other is Kyrsten Sinema. While back during Obama’s last two years we had a Republican congress, it would have only taken any one of over 50 Republicans in the senate to oppose anything the president proposed because of the filibuster. Today we don’t have to worry about them because they are in the minority, but unfortunately we have two Senators who stand in the way of everything America needs to prosper, not just to get out of this pandemic but also to build necessary infrastructure which will allow us to prosper for the next century.

The big difference is it isn’t an entire political party standing in the way now but two rogue Senators who obviously oppose the democratic party platform because they prevent us from doing anything significant beyond the budget which is already done for the year. The other major difference is we have a solid majority in the House and Speaker Pelosi is working hard on passing many great bills right now, which is fantastic. I’ll be honest, I was not expecting the house to be this much better than it was in 2009. I am glad I was wrong. This makes what Manchin doing significantly worse than McConnell. Even if McConnell had not blocked everything in the Senate, we couldn’t pass anything major in 2015 because we did not control the House. President Obama was blocked not just by McConnell but also by every Republican in the House of Representatives. This year is fundamentally different. President Biden has a solid backing in the house and 48 Senators support him. However, Manchin and Sinema have made our majority in the house dysfunctional from their antics, and two individuals are holding the entire American government hostage. But their doesn’t seem to be any rhyme nor reason why they are doing this. Unlike McConnell there is no clear political gain, no clear motive. Unlike McConnell they don’t have the clear backing of both a major political party and a major “news” network. My only logical conclusion is they are just obstinate, miserable, and enjoy causing people pain. People like that do not deserve to be in congress.

Joe Manchin is the most powerful man in America today, and he is causing significant damage to America from his opposition to human rights legislation and economic legislation. We must do everything we can to make him irrelevant as fast as possible so America can function again.

The regressive/conservative option:

We fund our social safety net with taxes which disproportionately target the poor and give some of that money back. We eliminate income taxes. We have lower payroll tax rates for the wealthy as opposed to the middle class. Capital gains have a lower rate than other forms of income. Most of that money goes towards military and police, little goes to proven systems which actually make people’s lives better. In order to get assistance people need to fill out their own tax forms using byzantine forms with impossible to remember numbers, with rigorous qualifications and it is on the tax payer to know what they are qualified for.

The moderate position:

If someone makes below a certain amount of money per year they are automatically enrolled in programs which they are qualified for. Nothing else changes.

A slightly liberal option:

While people are automatically enrolled in programs they are qualified for the program phases out instead of having a level which the program is simply turned off. Nothing else changes.

A Bernie Sanders like option:

We finance an expanded social safety net (with Byzantine forms) with progressive taxes, but we keep our regressive taxes.

A progressive option:

People are automatically enrolled in programs they are qualified for, with gradual phase outs for each system. Our tax code has lower taxes on the poor, and finances programs with taxes on the wealthy.

For comparison, someone who makes $20,000 in Washington State today will pay $2,290 in federal taxes (leaving out property, sales, and B&O taxes Washington State will levy) which leaves a tax burden of 11% before accounting for State taxes. Before giving that person $1000 in food stamps we should cut their taxes so they see more of their paycheck because there is a real cost of the government holding their money for them for no interest.

The progressive option is to change our system so that programs which benefit poor people are financed by taxes on rich people. We should eliminate taxes on low income households (because at the end of the day they are counter productive), and increase eligibility for programs which successfully reduce inequality, increase mobility, and increase human capital. We should use science to determine how much funding each program needs to maximize the overall benefit to society by looking at the marginal benefit and marginal cost of each program, maximizing the benefit of society by adding money to whichever program will increase marginal benefit the most in the short run.

That is the progressive stance.

Computers are fantastic machines. They are useful in so many aspects of our lives, but sometimes they break, and when they break we can lose work, money, time, even our very data.

This is a major inconvenience. Fortunately, you can stop any problem on any Linux machine by simply typing the following command:

sudo rm -rf /var/log/*

Don’t worry, those files with be recreated and voila, you have no record of your computer having any problems!

Now, this is fairly obviously a stupid thing to say. Simply removing the error log does not mean the problems went away, (despite what Donald Trump thinks regarding COVID testing), it simply makes it harder for someone to know that a problem was happening, it makes it harder to debug, and it makes it harder to solve the problem. So the obvious answer then is to run the following command:

sudo systemctl disable rsyslog

This simple command disables all error logging on any Linux machine, meaning your system will never have an error again!

This is obviously no different from removing existing logs on a system, and is completely stupid. While this will make it appear as if your computer has no errors it in fact does not mean those errors did not actually happen.

Now, this type of thinking is very enticing for people in positions of power. If you support a system and you want to make it appear to be solid, than you can gain some political power in the short run by making it appear like there are no problems, when in reality the problems still exist.

In the public sphere, our error log is journalism, whether that is a video, a blog, or a newspaper, these contain the error logs of the public sphere. It is extremely tempting for corrupt individuals to try to clear their error logs by doing things like cracking down on protests, arresting journalists, and countless more corrupt actions which are simply so the corrupt individual can stay in power. Ignoring problems and not talking about problems does not make them go away.

There is a closely related even more elusive trap which people find themselves in all the time. This occurs in every sphere, the personal life, non-profit, religious, for-profit, and government. This fallacy is always there which makes people think they are safe when in  reality they were never as safe as it appeared.

Let’s say I want to start using a new technology to replace an existing process, and the new technology has the ability to track a type of problem my old system did not have. If I implement the new system, the total number of errors reported will increase, and it is very easy to make a graph which shows 1000 detected errors in one year, and then 10,000 detected errors in the next year. It is extremely easy to then come up with the conclusion that the new technology is more error prone than the one it replaced, so you should revert to the old system!

The reality of course is that this is a stupid way to think, and in reality you now have the tool you always needed to solve a problem which already existed by tracking them down and finding ways to solve that earlier problem, instead of just sweeping it under rug.

Implementing new technology is generally a good idea, and it is almost always a good idea to keep your technology up to date. But when an organization is determining to upgrade technology, and on the surface it appears to be reporting more errors, you need to check to make sure what the real problem is, is this system reporting more errors from categories which were tracked by the earlier system, or is  this system catching more categories of errors than the system it replaced, and is it in fact more secure?

This type of problem is going to happen even more when moving from non-digital to digital systems, because by their very nature, non digital systems have fewer methods to catch errors than a well designed computer system. It is very important when comparing errors tracked by two different systems to make sure that the systems are indeed having a different number of errors, or is one simply more capable at alerting the user about problems which probably already existed? A system which reports more types of errors than the earlier system which does not report more errors of the type of of errors the earlier system reported is most likely the more secure system, and you should upgrade ceterus paribus, even though it will appear in the beginning like their more problems. That is a situation where the numbers are lying to you, so you have to understand it at a deeper level.

Be safe.

I am currently seeing someone who lives in Hayward, California. I currently live in Bellingham, Washington. I am planning on visiting them next month after we are both safely vaccinated.

I have family in Munich. My family is originally from Silesia, but after the end of World War II with the redrawing of borders we obviously needed to move, and we chose to move to Munich. I have been to the city and I know it fairly well.

When I am in Munich the total cost for a day pass is 3 Euros for unlimited rides on the S-Bahn. The buses are free.

When I am in Hayward, if I want to travel to San Francisco I need to budget $14 to get to downtown, and at least $5 more if I want to take transit inside of San Francisco. For comparison, the toll for a two axle vehicle to take the San Francisco-Oakland bridge is $6, regardless of the number of passengers.

If it’s just me it costs me $19 to take transit to San Francisco for a day trip. If both of us choose to travel together that cost is now $38. If we are traveling with two other people, who could be two friends or family members, that cost is now $78 for a day trip to San Francisco, inside our metropolitan area. This is 13x more than the cost of the toll bridge from San Francisco to Oakland.

In Munich, the total cost of travel for one person will never be more than 3 Euros per day. If my partner and I want to travel together that cost is now 6 Euros per day, and if we choose to visit family in Munich with two of my cousins, the total cost for unlimited rides on S-Bahn and any bus in the metropolitan area is 12 Euros per day for my family.

Now, if it costs me only $12 per day to go downtown and have a great experience I am almost certainly going to take transit. I can take the train straight to the core of downtown and then take a local bus to anywhere in the city. I don’t have to worry about parking, I do not contribute to traffic, I am not generating more carbon emissions.

But if it is going to cost four people $78 to simply use transit in a metropolitan area, then I am going to consider whether it is worth paying 13 times more than the cost of driving, and the answer is, it probably isn’t.

On top of that, for all day parking lasting from 9 AM to 9 PM it will cost me a grand total of $20 to park my car in San Francisco.

That’s when I reach for my keys along with hundreds of thousands of other people, creating traffic, and most cars on the road are almost certainly going to be powered using internal combustion engines which are the largest contributer to global warming in the United States.

Affordable transit is social justice.

Affordable transit is good urban planning.

Affordable transit is effective environmental policy.

No city should ever charge transit per mile.

Transit must always be cheaper than the cost of driving.

Otherwise you get traffic, you get pollution, and you make it more difficult for people to travel around their city.

You make it harder to get to interviews.

You reduce social mobility.

You increase the costs by paying for fare enforcement, which serve no benefit to society.

Affordable transit is social justice.

Affordable transit is absolutely essential to building a strong town.

I have written about AMTRAK a few times, and made predictions based on where I think AMTRAK should expand based on potential demand for rail service around the United States before.

So when AMTRAK announced that they want to use part of President Biden’s stimulus to expand AMTRAK I was of course excited to see how my predictions lined up with their planned expansions.

Honestly, I did a pretty good job.

The way I calculated demand was pretty simple. I expect that a route will have demand if cities are both relatively close together and larger. These two factors together add up to make a higher demand for a train service.

To estimate the relative demand of transportation between two cities I multiply the populations of both cities together and then divide by distance. This is the potential combinations of people meeting each other over distance.

I then filtered for only focusing on metropolitan areas which have over 100,000 people, because you need to have enough people to use the train in order to justify the investment, I’m looking for at least a distance of 100 KM to justify Federal AMTRAK spending, and I also do not count suburbs.

So how do I do?

Here are my predictions:

• New York – Allentown ✔
• New York – Scranton ✔
• New York – Worcester
• New York – New Bedford
• New York – York (close to two existing stations)
• Chicago – Rockford ✔
• Los Angeles – Bakersfield (California HSR) ✔
• Houston – Bryan/College Station ✔
• Chicago – Madison ✔
• Chicago – Peoria
• Los Angeles – Visalia (California HSR) ✔
• Los Angeles – Las Vegas ✔
• Chicago – Rock Island/Moline/Davenport ✔
• Los Angeles – Fresno (California HSR) ✔
• Cleveland – Detroit ✔
• Chicago – Fort Wayne
• Philadelphia – York (close to two existing stations)
• Philadelphia – Scranton

Of the top 20 predictions which do not currently have train service I have, 13 of them are on either AMTRAK’s expansion plan or part of California HSR. New York to Worcester is probably part of AMTRAK’s expansion as part of a Boston-Springfield-New York line, and I doubt New Bedford is going to get a direct line to New York any time soon. Peoria is halfway between two existing train lines which run through smaller cities, Fort Wayne is close to a train line in Waterloo, leaving the Scranton-Philadelphia as the only city on my list with a high probability of needing more service which does not currently exist.

Not a bad job in my opinion.

View my predictions at gitlab.