Saturday, May 31, 2008

My Book Lists

I've added two lists of books to my side panel. This is just a few of the books I've read over the past year but consists of my favorites. It is a decidedly slanted list because these are the authors whose ideas I support. As I find the time, I hope to summarize and review their contents. As I find time............(sigh)

Politics, Science and Climate Change

Next week, congress begins debating the Lieberman-Warner Climate Security Act. The goal of this legislation is to drastically reduce U.S. emissions of CO2 into the atmosphere because of its purported effect on global climate.

I have been intensively studying global warming for over a year – reading up on the science, politics and economics of this issue. Acutely aware of my biases, I have made a concerted effort to review multiple points of view, matching point and counterpoint on many aspects of the debate. There are excellent websites by leading climatologists which explain and analyze a variety of topics. In regards to the science, there seems to be well-intentioned, honest proponents with a wide spectrum of views.

What has become clear to me, however, is that too much of the science is hopelessly tangled with politics. The strongest proponents of anthropogenic, catastrophic, CO2-induced climate change (now there’s a mouthful!) are also the strongest proponents for government-imposed plans which reduce and ration energy use. The Lieberman –Warner bill is one of those plans.

The questions surrounding climate change involve both science and politics. Although these disciplines both require the use of facts and logic, the set of facts and the flow of arguments appropriate to each are not identical. These two aspects of the problem must be separated out in order to adequately analyze the quality of evidence presented and the logic of their conclusions.

I can see four main questions to be addressed, each with its own set of debatable data and arguments:

1) Is the global temperature rising?
2) Is there a measurable anthropogenic effect on global climate over and above natural variance?
3) Will we be worse off in a warmer world?
4) What is the best way for humans to respond to a change in climate?

An affirmative answer to questions 1 and 2 does not automatically lead to an affirmative answer in question 3. And, regardless of how you answer the first two questions, the fourth is completely unrelated!

The first two questions are appropriately addressed through scientific study, with all the attendant guides as to what constitutes adequate evidence for drawing conclusions about cause and effect. Questions 3 and 4, however, take us away from matters of the physical sciences into the realm of values and politics: What constitutes a better world? And, who gets to decide?

Regardless of whether you think the economy should be directed by the government or left to free individuals, it is intellectually dishonest to use climate science to push a political agenda. If what is desired is to use government force to prevent humans from using natural resources for their own purposes, that case needs to be made straight up. The facts of climate change, whatever they truly are, do not mandate a specific political action.

From my understanding of what conditions lead to improved human well-being, even if anthropogenic climate change is occurring, the best response is not forced reduction of energy expenditure. For a multitude of reasons, I see the measures proposed by the Lieberman-Warner bill as disastrous.

Life requires energy. Prosperity requires lots of energy. Our ability to respond to the challenges of nature, including those which humans cause themselves, are greatly enhanced by increasing our access to usable resources. As devastating as Katrina was to New Orleans, the loss of life and property there pales in comparison to the effects of the tsunamis and earthquakes in Asia. A significant contribution to the difference was the degree of material wealth available to the victims at the time of the disasters.

Changes in climate can be dealt with by means of adaptation and/or active mitigation. Our ability to respond to changes is enhanced by greater use of energy in order to further develop and exploit natural resources. To reduce energy and block resource development is to enshrine poverty. And that is a separate issue from whether or not the world is getting warmer.

Whether or not you agree with my conclusions, I think the discussions will be much more fruitful if we can keep the politics out of the science, and vise versa.

Saturday, May 24, 2008

A Hero of Capitalism

Just a quick post. This is a letter-to-the-editor published 5-8-08 in The Intellectual Activist Daily, a subscription daily news and analysis publication. I wrote it in response to a reference to by the editor, Robert Trasinksi, to The Other Path, a book by Peruvian economist, Hernando deSoto.

Letters to the Editor

In yesterday's TIA Daily ("Latin America's 'Other Path'"), you wrote:

"A lot of the credit for Peru's free-market reforms goes to a man not mentioned
in this article but referred to in its title. 'Peru Takes the Other Path' is a reference to Peruvian economist Hernando De Soto, whose 1987 book El Otro Sendero, 'The Other Path,' made the case for free markets, property rights, and the rule of law as the path to prosperity. (De Soto's title, in turn, was his answer to the Sendero Luminoso, or 'Shining Path,' a Marxist terrorist group.)"

If you haven't read De Soto's other book, The Mystery of Capital, it is very worth reading. De Soto asks the question, why hasn't capitalism brought wealth to Latin America? His answer is fascinating: the inability to produce capital. He points out that capital has two separate meanings: the actual physical assets and the potential of that physical asset to generate surplus value. It is the latter meaning of capital which is missing in Latin America, many former communist countries, and much of the Third World.

The key wealth-creating aspect of capital lies in the existence of formal property systems. Property is an abstraction, a relationship of a person to an asset. In order to be traded, used as credit, shared, and held securely (both against legal and illegal assaults), property must be converted into something concrete. This concrete form of property is generated through the multitude of precise legal rules governing title. Until formalized, property cannot become capital, cannot be securely used as collateral for a loan or equity exchanged for investment, as an address for collection of debts and taxes, or a place to identify individuals for judicial, commercial, or civic purposes. It is access to this aspect of ownership which the poor of the world are lacking.

DeSoto tallied up the value of assets "owned" by the world's poor and found them to be in excess $9.3 trillion dollars. But these assets exist as what De Soto calls "dead capital." The ownership is "informal" or "extralegal." They lack the legal representations of ownership which create enforceable property rights. Although property rights may exist on paper (in the laws), the actual barriers to formalizing ownership are cumbersome and expensive. The time and money required to legally register property or to legally start a business exceed the resources of the poor, so their businesses remain outside the law.

Without access to legally enforceable property rights, businesses must remain small and hidden from the authorities. Transactions can only occur between people directly known and trusted. Assets cannot be used as collateral for loans or credit. There is no way to create securities for trade in the capital market, or to spread risk among multiple investors. Forced to exist outside the law, the law becomes a threat. Disrespect for the law breeds opportunity for mafias and political instability.

In his book, De Soto analyzes in detail the requirements for turning an asset into functioning capital. Through his Institute for Liberty and Democracy, he has put these ideas into practice, helping Peruvians turn their dead capital into true capital. He is a true hero of capitalism.

Here are some links to learn more about his work:

—May 8, 2008

TIA Editor's Note: I have been aware of De Soto since I was a student at the University of Chicago and saw him give a talk on El Otro Sendero in 1987, and I agree with the assessment of him as a "hero of capitalism." I also intend to add him as a prominent example in the forthcoming print-issue version of my "What Went Right?" series.—RWT

Getting Started

Hi all,

Just getting set up here. So much has been happening lately that I wanted a place to put down my thoughts, ideas and feelings where others could check them out if they want.

First, an explanation of my title.

I am currently working on writing a K-12 curriculum which incorporates the ideas of political liberty and free market economics. It's a fantastic job which involves lots of reading, and then working to organize my thoughts, all on matters close to my heart and mind! Ideas are the force behind my life, and yet those ideas seem to separate me from so many people. This curriculum-writing job is giving me the chance to sort out my thinking and to try and better understand how and why I disagree so strongly on such important matters with people I love and respect. How can such good people disagree on what seem like such fundamental issues?

The world is a wonderful place, but there are things that could be better. We all seem to want peace, less suffering and a good life for everyone. Yet, our ideas on how to achieve these goals are often diametrically opposed.

While doing the background research for this curriculum, I realized that much of what concerns me centers on the issue of wealth. So many people have concluded that we have too much wealth, use too much energy and that the rich are rich at the expense of the poor. But, I think we can never have enough wealth, that life requires energy and wealth requires lots of energy, and that production and trade of wealth create a better life for everyone. To put it more succinctly:

Wealth is not the problem. Poverty is the problem. Wealth is the solution.

The solution to what? To hunger. To physical suffering. To much of the sickness and premature death in the world. To the lack of education. To the lack of opportunity. To improving the environment. To solving whatever problems humans choose to tackle. Greater wealth means more resources to devise solutions, to mitigate damage, and to protect ourselves from the forces of nature (whether an earthquake, a tsunami or a change in climate.) Wealth provides choices and flexibility.

Wealth is good.

But too often now, the creators of wealth are vilified. Money, that ubiquitous tool which simplifies trade, is "the root of all evil." Wealth is seen as a zero-sum, or even negative-sum, prospect, if not between men, then between men and "the environment." Even honestly obtained wealth is "tainted" and therefore justifies coerced redistribution.

But what is wealth? What are the conditions necessary for its production? Is one's man's gain truly another man's loss? Why or why not?
What is peace? What are the conditions for its creation and preservation? What are the best rules for peaceful, and just, human coexistence?
What is man's place in the world? Is he a part of nature? Or, the Destroyer of nature?
We live in a finite universe, but when coupled with man's reason and creativity, does that necessarily mean that "resources" are limited? Does "limited" necessitate government-enforced regulation and rationing?

These are the questions I am wrestling with. I have some ideas on the answers, but I need to further sharpen the clarity and consistency of my thinking. Then, I will be able to make better decisions, prioritize my actions, and improve my ability to communicate.

I intend to share part of that journey on this blog. I envision book reviews, journal-type entries, "letters-to-the-editor, " recommendations to articles or websites of interest....who knows what else.

I have been following a few blogs by some friends (see my links) and have been inspired. Let me know what you think and inspire me further!!